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What is the present value of a perpetual income stream with a constant payment of $200 if the interest rate is 5%?

Consider the following two options:
1. You have $100 today and you put it into a savings account for 5 years earning 5%; or
2. You have $100 today and you put it into a saving account for 10 years earning 2.5%.

Which scenario has a higher future value when you take the money from the account? Explain.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9881469

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