What Is the Present Value of an Infinite Stream of Annual

question 73

Multiple Choice

What is the present value of an infinite stream of annual payments of $10,000 per year if the first payment is received one year from today? Assume the interest rate is 10 percent.

• A)$100,000
• B)$1,000,000
• C)$10,000,000
• D)$1,000,000,000

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Definitions:

Free Trade

Trade that is unregulated by government tariffs or other artificial barriers; the levels of exports and imports occur naturally, as a result of supply and demand.

Consumer Surplus

The variance between the amount consumers are ready to pay for a good or service compared to the actual price they pay.

International Trade

the exchange of goods and services across international borders or territories.

Autarky

An economic system where a region or country is self-sufficient and does not engage in international trade.