How much would an investor be willing to pay for an investment which promises to pay $200 per year in perpetuity if the investor requires a 14 percent return on the investment? Round to the nearest cent. Do not include any unit (If your answer is $111.11, then type 111.11 without $ sign.)

1428.57

Explanation:

A perpetuity assumes a constant cash flow streams over an infinite period. The Present Value or the value of a perpetuity can be calculated if the periodic/annual payment that a perpetuity pays and the interest rate or required rate of return is known.

In this question the present value that an investor, requiring 14% return, will attach to a perpetuity paying 200 annually can be calculated as follows,

PV or P =  Cash flow/ Interest or Required rate of Return

PV/P = 200/0.14  => 1428.57 rounded off to nearest cent

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"we first find value of tax in dollars.

the difference between the two prices   is: 23. 54 - 22 = 1.54

therefore the sales tax in dollars is 1.54

the tax % will be   (amount of tax / original cost price ) × 100

(1.54 / 22) × 100  → (0.07) × 100 =   7

so the tax rate is 7%

we can double check the answer.

7 % of 22   → (7/100) × 22 → 0.07 × 22 = 1.54

22 + 1.54 = 23.54"