You Are Evaluating a Perpetuity

question 117

Multiple Choice

You are evaluating a perpetuity.The first payment is $100,and it arrives in one year.Each subsequent annual payment will increase by 10%.If the discount rate is 8%,what is the present value of this perpetuity?

• A) $5,500
• B) $1,000
• C) $1,250
• D) The present value is infinite

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Definitions:

Incision

A surgical wound made by cutting into body tissue.

Dislocation

The displacement of a bone end from a joint.

Comminuted Fracture

A type of bone fracture where the bone is broken into more than two pieces or crushed, often requiring surgery for repair.

Tetanus Toxoid Immunization

A vaccination given to prevent tetanus, a serious infection caused by bacteria entering the body through cuts or wounds.