Whats the present value of a perpetuity that pays 100 per ye

What\'s the present value of a perpetuity that pays $100 per year if the appropriate interest rate is 6%? Select one: a. $1,666.67 b. $2,854.13 c. $1,011.87 d. $2,591.45 e. $1,324.89

Solution

Present value of perpetuity=annual cash flows/interest rate

=100/0.06

Which is equal to

=$1666.67(approx)