If You Own a Perpetuity of $100 and If the Discount

question 178

Multiple Choice

If you own a perpetuity of $100 and if the discount rate is 5 percent, then its present value

• A)cannot be determined unless we know the number of years
• B)is $95.21
• C)is $105
• D)is $2, 000
• E)is infinite

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Definitions:

Industry Structure

The organization or arrangement of the market within an industry, often characterized by the number of firms, product differentiation, and barriers to entry.

Diagram (A)

A graphical representation used to illustrate or clarify information, processes, or systems.

Price

The amount of money expected, required, or given in exchange for something else.

Quantity

The amount or number of a material or immaterial good considered as a unit or in total.