Consider a Perpetuity That Pays $100 Every Year

question 2

Multiple Choice

Consider a perpetuity that pays $100 every year.If the annual rate of discount is 7 percent, the present value of the perpetuity is

• A)$107.00.
• B)$1,300.00.
• C)$1,428.57.
• D)$1,700.00.

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Definitions:

Efficiently

Pertains to performing or operating in the best possible manner with the least waste of time and effort.

Resources

Various means or inputs (such as labor, capital, land) used in the production of goods and services.

Efficiency

The extent to which resources are used in the most productive way possible to achieve maximum output or outcomes.

Opportunity Costs

The cost of an alternative that must be forgone in order to pursue a certain action or the benefits you miss out on when choosing one alternative over another.