Explore BrainMass

Explore BrainMass

    perpetuity

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    You are willing to pay $15,625 to purchase a perpetuity which will pay you and your heirs $1,250 each year, forever. If your required rate of return does not change, how much would you be willing to pay if this were a 20-year, annual payment, ordinary annuity instead of a perpetuity?

    © BrainMass Inc. brainmass.com June 3, 2020, 9:56 pm ad1c9bdddf
    https://brainmass.com/business/annuity/calculating-present-value-perpetuity-206404

    Solution Summary

    This solution explains how to calculate the present value of a perpetuity.

    $2.19

    ADVERTISEMENT