Question

A perpetuity pays $390.26 at the start of each year. The present value of this perpetuity...

A perpetuity pays $390.26 at the start of each year.
The present value of this perpetuity at an annual effective interest rate i is equal to the present
value of an annuity which pays 800 at the start of the first year, 790 at the start of the second year,
780 at the start of the third year and so on for 20 years. Find i to 1 significant figure.

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Answer #1

i = 3.78%

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