A well known result from financial analysis is the perpetuity pricing formula. The present value of earning a fixed amount of income C in each period from now out to infinity (literally earning C in each period forever), given an inter- 1 est (discount) rate r is: PV(C,r) = 5 (1+r)t (1) r (A) How does PV(C, r) change with C and r? Why is this the case? (B) What is the value of a perpetuity that pays $100 a year if the interest (discount) rate is r= .05? (C) What is the value of a perpetuity that pays $100 a year, beginning in year 3, if the interest (discount) rate is r = .05