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Suppose you are offered a $1,000 payment each year until you die. After that, your children will inherit the payment. Then their children. Forever. (And
Suppose you are offered a $1,000 payment each year until you die. After that, your children will inherit the payment. Then their children. Forever. (And you love your progeny as much as you love yourself.) The payment is guaranteed by the Bank of Japan, and you want a 4% return on your investment. What is the maximum price you should pay for this perpetuity?
Select one:
a. $10,000
b. $20,000
c. $25,000
d. $100,000
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