Question:

Moon's friend, lives in Greece and planning on moving to Germany, owns a perpetuity that promises to pay 1,000 at the end of each year, forever. Moon received an e-mail from her friend and she offered to sellMoon all of the payments to be received after the 25th year for a price of 1,000.At an interest rate of 10%, shouldMoon pay the 1,000 today to receive payment numbers 26 and onwards?

A. No, the perpetuity is worthtoday for 9,077

B. Yes.

C. No, the perpetuity is worth todayfor 923