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Explain the rule for calculating the present discounted value of a perpetual income stream

Explain the rule for calculating the present discounted value of a perpetual income stream. At a 5 percent interest rate, what is the worth of a perpetuity paying $100 per year? Paying $200 per year? Paying $N per year? At 10 or 8 percent, what is the worth of a perpetuity paying $100 per year? What does doubling the interest rate do to the capitalized value of a perpetuity—say, a perpetual bond?

Nov 27 2019 View more View Less

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