A perpetuity pays

x

at the end of year

1,1.02x

at the end of year

2,1.02^(2)x

at the end of year 3 , and\

1.02^(k-1)x

at the end of year

k=1,2,3,cdots

\ The annual effective interest rate is

5.5%

.\ The present value of this perpetuity is

$1,000

.\ Calculate

x

.\ A)

$27.5

\ B)

$30

\ C)

$32.5

\ D)

$35

\ E)

$37.5

A perpetuity pays X at the end of year 1,1.02X at the end of year 2,1.022X at the end of year 3 , and 1.02k1X at the end of year k=1,2,3, - The annual effective interest rate is 5.5%. - The present value of this perpetuity is $1,000. Calculate X. A) $27.5 B) $30 C) $32.5 D) $35 E) $37.5