Calculate the Present Value of a Perpetuity That Will Pay

question 145

Multiple Choice

Calculate the present value of a perpetuity that will pay out $1,500 every month and the first payment is to be made 10 years from now. The interest rate earned is 9% compounded annually.

• A) $81,587
• B) $82,199
• C) $92,761
• D) $88,546
• E) $87,913

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Definitions:

Finance Company

A company that makes loans to individuals and/or businesses.

Breach of Agreement

The failure to fulfill the terms of a contract by one or more parties involved.

Faulty Goods

Products that are defective, damaged, or not functioning as intended when sold.

Payments

The act of transferring money or consideration from one party to another in exchange for goods, services, or to settle a debt.