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A perpetuity of $4000 per year beginning paying 3 years from today offers an 3% return....

A perpetuity of $4000 per year beginning paying 3 years from today offers an 3% return. What is its present value?

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Answer #1

PV of perpetuity is mathematically represented as:

$133,333.33 = PV * (1 + 3%)2

$133,333.33 = PV * 1.0609

PV = $125,679.45

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