Answer:
Present Value of the perpetuity= $460,000
Explanation:
A perpetuity is a series of equal periodic cash payment or receipt that occurs for the foreseeable future. i.e for an indefinite period of time
To calculate the Present value of a perpetuity, we use the formula below:
PV = A/(r-g)
A- cash flow in year 1, r- discount rate, g- growth rate
A- 23,000, r - 8%, g - 3%
PV = 23,000/(0.08-0.03)
= $460,000
