question archive Calculate the present value of a $40 perpetuity
Calculate the present value of a $40 perpetuity
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Calculate the present value of a $40 perpetuity. Use a discount factor of .1% to account for the time value of money.
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| Present value of a perpetuity= Cash flow/ Discount rate |
| where, the given cash flow= $ 40 & |
| the discount rate= 0.1% |
| so, plugging in these values, in the above formula, |
| 40/0.1%= |
| 40000 |
| (Answer) |
