Respuesta :

Answer:

Present value = Cashflow

                           Discount rate

Present value = $125,000

                             0.07

Present value = $1,785.71

Explanation:

In this case, we will apply the formula for present value of perpetuity, which equals cashflow divided by the discount rate. The present value of perpetuity formula is applied because the cashflows are indefinite ie the number of years were not provided.