The Present Discounted Value of an Infinite Stream of Payments

question 48

Multiple Choice

The present discounted value of an infinite stream of payments of $1 per year when the interest rate is 10% is:

• A) 0.909.
• B)1.
• C)1.1.
• D)10.

---

Definitions:

Three Terms

In logic, particularly syllogistic reasoning, the use of three different terms to construct a conclusion derived from two premises.

Categorical Syllogism

A form of deductive reasoning consisting of three parts: two premises and a conclusion, where all statements are categorical propositions.

Conclusion

The end or finish of an event, process, or text; in logic, it is the statement that necessarily follows from the premises of an argument.

Categorical Syllogism

A form of deductive reasoning consisting of three propositions: a major premise, a minor premise, and a conclusion, each of which states a relationship between categories.