Yahoo Answers is shutting down on May 4th, 2021 (Eastern Time) and beginning April 20th, 2021 (Eastern Time) the Yahoo Answers website will be in read-only mode. There will be no changes to other Yahoo properties or services, or your Yahoo account. You can find more information about the Yahoo Answers shutdown and how to download your data on this help page.
Trending News
Present Value question with perpetuity paid every two years?
what is the present value of an investment that pays $150 every two years indefinitely, if the first payment starts two years from now? The effective monthly rate is 1 percent
A. $556.17
B.$1182.96
C.$1573.96
D. $1675.14
the answer is A but i am unsure how exactly to get to that solution. if you could explain and show me i would appreciate it
2 Answers
- olliverLv 63 years ago
The effective rate for 24 months is
Effective rate = (1 +12%/12)^24 - 1 = 26.97%
https://www.double-entry-bookkeeping.com/discount-...
The value of the perpetuity = 150 / 26.97% = 556.17
