Required rate of return

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You are willing to pay $31,250 now to purchase a perpetuity that will pay you and your heirs $2,500 each year, forever, starting at the end of this year. If your required rate of return does not change, how much would you be willing to pay ifthis were a 40-year, annual payment, ordinary annuity instead of perpetuity?

Reference no: EM133068906

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