What is the present value of perpetuity

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Reference no: EM132054021

1. Sky invests $120,000 today and receives a future value 14 years from now of $500,000. Interest is compounded twice per year. Her stated annual interest rate is _____ for this twice-a-year compounded investment.

a. 10.3%

b. 10.6%

c. 10.4%

d. 10.5%

e. 10.7%

2. Brodie receives $900 every 12 months forever, starting 19 months from today. If his stated annual interest rate is 17% compounded monthly, what is the present value of this perpetuity?

a. $4,800

b. $4,400

c. $4,500

d. $4,700

e. $4,900

Reference no: EM132054021

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