perpetuity
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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?
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Solution Summary
This solution explains how to calculate the present value of a perpetuity.
Education
- BE, Bangalore University, India
- MS, University of Wisconsin-Madison
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