Respuesta :
The present value of perpetuity or infinite payment required for scholarship is $ 117,647.
Infinite payment (Perpetuity) = $ 5000
Discount rate (r) = 4.25% = 0.0425
Present value of perpetuity = Infinite amount / r
= $5,000/0.0425
= $117,647
A perpetuity is a type of security that pays for an indefinite period of time. In finance, perpetuity is defined as an endless stream of identical cash flows.
Some of the features of perpetuity are: -
- It's essentially an annuity with no set end date.
- Simply dividing the amount of the regular cash flows by the discount rate yields the present value of a perpetuity.
- A growing perpetuity has a growth rate that raises the cash flows received each period in the future.
- Perpetuities are uncommon financial products these days, but the concept of a perpetuity is still important in finance.
Learn more about perpetuity here:
https://brainly.com/question/24261067
#SPJ4
