Question

What is the present value of a $1,200 payment made every year forever when interest rates are 4.5 percent

Answer 1

Answer:

26,666.67

Explanation:

A $1,200 payment is made forever

The interest rate is 4.5%

= 4.5/100

= 0.045

Therefore the present value can be calculated as follows

= 1,200/0.045

= 26,666.67

Hence the present value is 26,666.67