Oe) None of the above13. What's the present value of a perpetuity that pays $300 per year if theinterest rate is 8%? *O a) $3,250O b) $3,440O c) $3,750d) $3,960e) None of the above14. Adanms Corp's sales last vear were $57 000 apd its total assets were

Annual deposit(A) =300 Interest rate (i) = 8% Therefore Present Value of Perpetual Deposit = A/i…

Answered: 13. What's the present value of a…

13. What's the present value of a perpetuity that pays $300 per year if the interest rate is 8%? * O a) $3,250 O b) $3,440 O c) $3,750 O d) $3,960 O e) None of the above

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 3CE

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Oe) None of the above
13. What's the present value of a perpetuity that pays $300 per year if the
interest rate is 8%? *
O a) $3,250
O b) $3,440
O c) $3,750
d) $3,960
e) None of the above
14. Adanms Corp's sales last vear were $57 000 apd its total assets were

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