Engineering Board Exam Reviewer · Perpetuity and Capitalized Cost · easy
A scholarship pays P120,000 every year forever, with the first payment made now. Find the present worth at 8% interest.
- P1,500,000
- P1,380,000
- P1,620,000
- P1,440,000
Answer
C. P1,620,000
Solution
The payment now is worth P120,000, and the perpetuity of later payments is worth 120,0000.08=P1,500,000. Total =P1,620,000.
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