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Problem:

Suppose $1000 is invested at the end of each year in perpetuity. The interest rate is 8% per year.

(a) Calculate the present value (PV) of the investment to the nearest cent after: (i) 1 year (ii) 10 years (iii) 50 years (iv) 100 years.

(b) Do the present values calculated in (a) appear to be approaching a limiting value as the number of years increase? If so, what is this value? Explain your answer.

Extra Information:

This question basically belongs to the Finance as well as it explains about computation of present value of an investment for one year, 10 years, 50 years and 100 years and discuses about the limiting value of present value as the number of years increase.

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