If the Interest Rate Is 13% and Will Remain 13

question 23

Multiple Choice

If the interest rate is 13% and will remain 13% forever, how much would a rational investor be willing to pay for an asset that will pay him 6,780 dollars 1 year from now, 1,276 dollars 2 years from now, and nothing at any other time?

• A)53,846.15 dollars
• B)6,000 dollars
• C)98,000 dollars
• D)7,000 dollars
• E)8,000 dollars

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