What's the present value, when interest rates are 7.5 percent, of a $170 payment made every year forever

The present value of the perpetual annuity is $2,266.67.

Explanation:

Giving the following information:

Interest rate (i)= 7.5% = 0.075

Cash flows= $170

To calculate the present value (PV) of this perpetual annuity, we need to use the following formula:

PV= Cf/ (i)

PV= 170 / 0.075

PV= $2,266.67

The present value of the perpetual annuity is $2,266.67.

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