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How much more is this perpetuity worth than annuity

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Reference no: EM131583500

A perpetuity pays $90 every year forever. Assume a 9% discount rate and cash flows at the end of period.

(a) What is the value today of this perpetuity?

(b) How much more is this perpetuity worth than an annuity of the same amount for 30 years?

(c) If the first payment of this perpetuity weren’t made until 4 years from now, how much would you need to deposit today to fund the purchase of the perpetuity?

(d) How much would this perpetuity be worth if the discount rate were 0%?

Reference no: EM131583500

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