What is the present value of annual payments of $1,000 received in perpetuity (i.e., forever) if the world interest rate is 6%?
A) $16,667
B) $1,060
C) $6,000
D) $60

Question

Quizplus · Accepted Answer

To find the present value of perpetual annual payments, we can use the formula PV = PMT/i, where PV is the present value, PMT is the annual payment, and i is the interest rate.
PV = 1000/0.06 = $16,667

What Is the Present Value of Annual Payments of $1,000