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Assume that you have two perpetuities that have the same annual cash flow, and both are evaluated with the same effective annual rate of return
Assume that you have two perpetuities that have the same annual cash flow, and both are evaluated with the same effective annual rate of return of 6.80 percent. Perpetuity 1 will have cash flows in Years 1 through infinity, while Perpetuity 2 will have cash flows in Years 21 through infinity. Perpetuity 2 has a value of $2,200 at Year 20 . Now assume a 10 -Year annuity with payments in Years 6 through 15, where these payments are equivalent to those of the perpetuities and have the same risk (and thus the same discount rate). Given this information, determine the value of the 10-Year annuity, evaluated at Year 20. $3,111.21 $3,377.41$2,578.81$3,643.61 $2,845.01
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