Question: 4 . Compute the present value ( PV ) of an annuity that pays $ 2 2 5 annually and forever, if the opportunity cost

4. Compute the present value (PV) of an annuity that pays $225 annually and forever, if the opportunity cost rate is (a)4 percent, (b)8 percent, and (c)10 percent. Why does the present value decrease as the opportunity cost increases?

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