Consider a perpetuity making one payment each year that has a present value of $1,500.If the annual rate of discount is 3 percent, the annual payment is
A)$15.00.
B)$45.00.
C)$500.00.
D)$1,500.00.

Question

Quizplus · Accepted Answer

The formula for the present value of a perpetuity is PV = PMT / r, where PV is the present value, PMT is the annual payment, and r is the annual rate of discount. Using this formula, we can solve for PMT: 
$1,500 = PMT / 0.03 
PMT = 0.03 x $1,500 
PMT = $45.00 
Therefore, the annual payment is $45.00.

Consider a Perpetuity Making One Payment Each Year That Has