Answer:
PV= $5,833.33
Explanation:
Giving the following information:
Asset 1 has a required return of 12% and will produce a stream of $700 starting at year 1 and continuing indefinitely.
We need to find the present value of a perpetual annuity using the following formula:
PV= Cf/i
Cf= perpetual cash flow
The value of Asset 1 today is:
PV= 700/0.12= $5,833.33