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Suppose you have the opportunity to purchase a perpetuity in which you receive $10 a year starting at year 5. After using the perpetuity formula,

Suppose you have the opportunity to purchase a perpetuity in which you receive $10 a year starting at year 5. After using the perpetuity formula, how many additional years do you need to discount the lump sum in order to find what the fair price should be? (Hint: Draw a timeline!)

a) 4 years

b) 5 years

c) 0 years

d) 2 years

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