Question

a. An investment pays you ​$20,000 at the end of this​ year, and ​$10,000 at the...

a. An investment pays you ​$20,000 at the end of this​ year, and ​$10,000 at the end of each of the four following years. What is the present value​ (PV) of this​ investment, given that the interest rate is 3​% per​ year?

a. $27,753

b. $66,607

c. $55, 506

d. $44,405

B. A perpetuity has a PV of $27,000. If the interest rate is 4​%, how much will the perpetuity pay every​ year?

a. $540

b. $864

c. $1080

d. $648

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