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A record company bought the rights to an artist's music catalogue and they expect to receive royalty payments of $45,000 per year forever (a perpetuity).

A record company bought the rights to an artist's music catalogue and they expect to receive royalty payments of $45,000 per year forever (a perpetuity). What is this cash flow worth? Assume interest rates are 7%.

A. $ 650,286

B. $ 1,127,286

C. $ 58,714

D. $ 642,857

E. The value is infinite.

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