Multiple Choice
Which of the following alternatives signify the difference between the present value of a $150 perpetuity and 2-year $150 annuity, both discounted at 15 percent per annum.
A) The perpetuity would require an initial investment worth $100 while the annuity would require an initial investment worth $244.07.
B) The perpetuity would require an initial investment worth $1,500 while the annuity would require an initial investment worth $115.07.
C) The perpetuity would require an initial investment worth $1,000 while the annuity would require an initial investment worth $244.07.
D) The perpetuity would require an initial investment worth $100 while the annuity would require an initial investment worth $115.07.
Correct Answer:
Verified
Correct Answer:
Verified
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