The vanilla perpetuity pays $X at the end of every N's year forever starting at the...

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The "vanilla" perpetuity pays $X at the end of every N's year forever starting at the end of the first year. As an example, for N=2, it pays $X at t=1, t-3, t=5, t=7, etc.. The effective annual rate is 10%. If the present value is $500, N is 4, how much is X? (Note: please retain at least four places of a decimal in your calculation). The "vanilla" perpetuity pays $X at the end of every N's year forever starting at the end of the first year. As an example, for N=2, it pays $X at t=1, t-3, t=5, t=7, etc.. The effective annual rate is 10%. If the present value is $500, N is 4, how much is X? (Note: please retain at least four places of a decimal in your calculation).

Answer rating: 100% (QA)

The formula for the present value of a perpetuity is PV X r where PV is the present value ... View the full answer