- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 1. The Time Value of Money
- Subject 2. The Future Value and Present Value of a Series of Equal Cash Flows (Ordinary Annuities, Annuity Dues, and Perpetuities)
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?
B. $1,500.00
C. infinite
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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