You are willing to pay 15625 now to purchase a perpetuity, Financial Management

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You are willing to pay 15625 now to purchase a perpetuity

You are willing to pay $15,625 now to purchase a perpetuity which will pay you and your heirs $1,250 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 if this were a 20-year, annual payment, ordinary annuity instead of a perpetuity?

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Financial Management: You are willing to pay 15625 now to purchase a perpetuity

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Financial Management: You are willing to pay 15625 now to purchase a perpetuity

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