Four years ago, Kenji purchased a perpetuity that agrees to pay him and his heirs $150 per month forever. At the time of purchase, Kenji was expecting to earn an annual return of 6.00%, but in the intervening years, the economy and the available investment alternatives have changed. In today's market, it is now reasonable to anticipate an annual return of 3.60%. By how much would you expect the value of Kenji's perpetuity to change from when he purchased it until today?

Answer rating: 100% (QA)

The value of a perpetuity can be calculated using the formula Perpe... View the full answer