What is the present value, when interest rates are 6.5 percent, of a $100 payment made every year forever?
A) $6.50
B) $650.00
C) $1,000.00
D) $1,538.46

Name: What is the present value, when interest rates are 6.5 percent, of a $100 payment made every year forever? A) $6.50 B) $650.00 C) $1,000.00 D) $1,538.46
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Quizplus · Accepted Answer

The present value of a perpetuity is calculated as the payment amount divided by the interest rate. Here, $100 / 0.065 = $1,538.46.

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