How to calculate present value of investment yield in perpetuity

1.	How to calculate present value of investment yield in perpetuity
Answer» Answer: PV = C / (r – g) PV = Present value. C = Amount of CONTINUOUS CASH PAYMENT. r = Interest rate or yield. Perpetuity is a perpetual annuity, it is a series of EQUAL infinite cash flows that occur at the end of each period and there is equal interval of time between the cash flows. Present value of a perpetuity equals the periodic cash flow divided by the interest rate.....Mark Brainlist Selected my Question...The present value of a perpetuity has an INVERSE relationship to the discount rate you use to value it. If we were to value this bond at a 4% discount rate, the present value would jump to $12,500 (PV = $500 ÷ 0.04). If we valued it with a 10% discount rate, the present value would fall to $5,000 (PV = $500 ÷ 0.10)

Answer»

Answer:

PV = C / (r – g)

PV = Present value. C = Amount of CONTINUOUS CASH PAYMENT. r = Interest rate or yield.

Perpetuity is a perpetual annuity, it is a series of EQUAL infinite cash flows that occur at the end of each period and there is equal interval of time between the cash flows. Present value of a perpetuity equals the periodic cash flow divided by the interest rate.....Mark Brainlist Selected my Question...The present value of a perpetuity has an INVERSE relationship to the discount rate you use to value it. If we were to value this bond at a 4% discount rate, the present value would jump to $12,500 (PV = $500 ÷ 0.04). If we valued it with a 10% discount rate, the present value would fall to $5,000 (PV = $500 ÷ 0.10)

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