Question

Find the present value of a perpetuity that produces annual payments of 6500 dollars once per year,starting one year from now.SAssume am effective rate of interest is 10.3 percent.

Answer 1

According to the questions

Produce annual payments = 6500$ /once per year

 Effective rate of interest = 10.3%

we know that-

$I = \dfrac{P\times R\times T}{100}$

$6500 = \dfrac{P\times 10.3\times 1}{100}$

P = 63,106.7961$