- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 2. Time Value of Money in Finance
- Subject 2. Fixed Income Instruments and the Time Value of Money

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**CFA Practice Question**

You expect to receive a series of annual payments forever. The present value of this series of payments is $575.00. If these payments can be invested at a rate of 13% per year, what is the amount of each cash flow?

A. $4,423.08

B. $575.00

C. $74.75

**Explanation:**A = (PV)(r) = (575.00)(.13) = 74.75

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**User Contributed Comments**
2

User |
Comment |
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sarasyed5 |
im sorry i know i sound stupid but which formula is this? |

fberlinger |
PV of a perpetuity = PMT / (I/Y) >> solve for PMT |