- 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
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
User Contributed Comments 2
| User | Comment |
|---|---|
| sarasyed5 | im sorry i know i sound stupid but which formula is this? |
| fberlinger | PV of a perpetuity = PMT / (I/Y) >> solve for PMT |