The interest rate is fixed at 10%. You are offered an asset that pays $1,000 from now until eternity at yearly intervals. You find its present value by calculating the sum of the discounted annual payments in the income stream secured by the asset. What discount factor will you use? Assuming no uncertainties, at what price will the asset be traded?

Answer rating: 100% (QA)

To find the present value of an asset that pays 1000 from now ... View the full answer