You Will Receive a R100 Annual Perpetuity, the First Payment

question 27

Multiple Choice

You will receive a R100 annual perpetuity, the first payment to be received now, at Year 0, a R300 annual perpetuity payable starting at the end of Year 5, and a R200 semi-annual (2 payments per year) perpetuity payable starting midway through Year 10.If you require an effective annual interest rate of 14.49 percent, what is the present value of all three perpetuities together at Year 0? (Hint: The semi-annual annuity can be thought of as two annual annuities.)

• A) R2,091.86
• B) R2,785.14
• C) R4,213.51
• D) Infinite; the present value of any perpetuity is infinite.
• E) Cannot determine the value since some payments are annually and some semi-annually.

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Definitions:

Axons

Long, slender projections of neurons that conduct electrical impulses away from the neuron's cell body, facilitating communication within the nervous system.

Neurons

Specialized cells within the nervous system that transmit information through electrical and chemical signals.

Brain Operation

Surgical intervention aimed at treating brain-related conditions or injuries, often involving the removal or repair of brain tissue.

Billion

A number representing a thousand million (1,000,000,000) in the American and modern British numeric system.