CFA Practice Question

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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 $10,000. If these payments can be invested at a rate of 15% per year, what is the amount of each cash flow?

A. $666.67
B. $1,500.00
C. infinite
Correct Answer: B

A = (PV)(r) = (10,000.00)(.15) = 1,500.00

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