A perpetuity pays $190 per year and interest rates are 8.4 percent. How much would its value change if interest rates increased to 9.9 percent? Note: Round your answer to 2 decimal places.
Added by John C.
Step 1
4 percent. The formula for the present value of a perpetuity is: Present Value = Payment / Interest Rate Plugging in the values: Present Value = $190 / 0.084 Present Value = $2261.90 Show more…
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