Question

What is the present value of a perpetual flow of constant payments of 1 550 currency units, for an individual investor, if the average perpetual expected interest rate is assumed 4.5%?

a. 34 343.43

b. 34 444.44

c. 43 444.44

d. 43 434.34

e. 43 333.33

Answer 1

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

= $\frac{1550}{0.045}= 34, 444.44$