Question: (1) A perpetuity starting in 4 years has a present value of 0.85 times an identical perpetuity starting today (PV2 = 0.85 PV1). (i) If

(1) A perpetuity starting in 4 years has a present value of 0.85 times an identical perpetuity starting today (PV2 = 0.85 PV1).

(i) If P V 1 is $960.18, what are the cash flows from the perpetuity?

(ii) What is the value of a 4 year annuity in terms of PV1 & PV2? Use this to value a 4 year annuity with the same cash flows starting today.

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