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Annuities vs. Perpetuities Calculations

CORPFN-ATGKEK

How much more is a perpetuity of \$1,000 worth than an annuity of the same amount for 10 years? Assume a 10% annual interest rate and cash flows at the end of the period.

A

$1,486

B

$2,395

C

$3,855

D

$5,145