Multiple Choice
How much more is a perpetuity of $1,000 worth than an annuity of the same amount for 20 years? Assume a 10 percent interest rate and cash flows at end of period.
A) $297.29
B) $1,486.44
C) $1,635.08
D) $2,000.00 Difference= $1,000/.10 - $1,000[1/.10-1/.10(1.10) 20]
= $10,000 - $8,513.56
Correct Answer:
Verified
Correct Answer:
Verified
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