Question

An investor evaluates the present value of a perpetual flow of constant payments of 1 550 currency units at 35 000 currency units. Which is the average perpetual expected interest rate, considered in this valuation?:

a. 3.44%

b. 4.43%

c. 4.34%

d. 3.34%

e. 3.77%

Answer 1

$PV= \frac{CF}{r}$

$r= \frac{1550}{35000}$ = 0.04429

r= 4.43%