The present value of this perpetuity is 3350.
A perpetuity is an annuity that has no give up, or a movement of cash payments that continues for all time. There are few real perpetuities in lifestyles. as an instance, the authorities issued them in the beyond; those were referred to as and were all sooner or later redeemed i
Rate of interest = 15%
Brodie receives $1100 every 12 months
Annualized interest rate = (1+15%/12)^12 - 1 = 17.2271%
Present value of perpetuity at the end of 3 months since the first payment will be received 15 months from now, so the present value will be calculated as on 3rd month.
PV = Payment / Annualized interest rate
⇒ 600/17.2271%
⇒ 3483
Present value of perpetuity today = 3483/(1+15%/12)^3
⇒3348
Hence the present value is close to 3350.
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