A perpetuity will pay $2 500 per year, starting five years after the perpetuity is purchased. What is the future value (FV) of this perpetuity, given that the interest rate is 5%?Question 12Select one:$41 096$47 429There is no solution to this problem.$42 740
Question
A perpetuity will pay 41 09642 740
Solution
The future value of a perpetuity cannot be calculated because, by definition, a perpetuity is an infinite series of payments. Therefore, there is no solution to this problem.
Similar Questions
40 000 (1 + 0.12 )2×5= 40 000 (1 + 0.12 )10= 40 000 (1 + 0.05)10= 40 000 (1.05)10= 40 000 × 1.628894627= R65 155.78507= R65 155.793. Calculate the future value of R40 000, invested for five years, at 10%per annum, compounded quarterly (i.e., 4 times a year).FV = PV (1 + 𝑖𝑓)𝑓𝑛= 40 000 (1 + 0.14 )4×5= 40 000 (1 + 0.14 )20= 40 000 (1 + 0.025)20= 40 000 (1.025)20= 40 000 × 1.63861644= R65 544.65761= R65 544.664. Calculate the future value of R40 000, invested for five years, at 10%per annum, compounded monthly (i.e., 12 times a year).FV = PV (1 + 𝑖𝑓)𝑓𝑛= 40 000 (1 + 0.112 )12×5= 40 000 (1 + 0.112 )60= 40 000 (1 + 0.008333333)60
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