Answer:
A. 571.423
B .545.45
Explanation:
A. Calculation for the present value of a perpetuity
Present Value = $600*1 /(1+.05)
Present Value = $600*1 /1.05
Present Value =571.423
Therefore the Present value of a $600 perpetuity if the interest rate is 5 % will be 571.423
B. Calculation for the present value if thr interest rate doubled to 10%,
Present Value = $600 /(1+.01)
Present Value = $600/1.01
Present Value =545.45
