What is the value of a perpetuity

Reference no: EM13281286

1) What is the value of a perpetuity that starts in one year, that pays $10 per year and has an interest rate of 10%?
2) What is the value of a perpetuity that pays $10 per year, starts today and has an interest rate of 10%? Hint: Do not discount the first payment.
3 What is the value of a perpetuity that pays $10 per year, starts in two years and has an interest rate of 10%? Hint: Find the total value of the perpetuity using the formula and then discount back the total value to year 0.

Reference no: EM13281286

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