As the question says t=4, this means at 3rd year end or 4th year beginning. we’ll take N= 3 for End mode or N= 4 for Bgn mode. Because while computing Pv with end mode, answer comes one year before. Answer is 751.31
Always remember the pv of perpetuity will be one year before the start of perpetuity payments. In this quest If we have 1000 at the end of 3rd year only then we will earn 100(1000*10%) from 4th year end onwards. I think you have taken the pv of perpetuity at end of 4th year and discounted it for 4 more years and got option A as answer. But the pv of perpetuity will be at the end of 3rd year and to find pv today we have to discount it for just 3years. So answer will be B.
Answer will be option A 683. Use formula of perpetuity A/I and then using TVM mode pull the amount today. FV1000, I/Y10% , N4 , CPT=PMT
Please share the answer.
Perpetuity
=A/I
100/.10
=1000
Present Value of Perpetuity
FV=1000
N=3
I=10
CPT PV
751.31
Please share the answer
Always remember the pv of perpetuity will be one year before the start of perpetuity payments. In this quest If we have 1000 at the end of 3rd year only then we will earn 100(1000*10%) from 4th year end onwards. I think you have taken the pv of perpetuity at end of 4th year and discounted it for 4 more years and got option A as answer. But the pv of perpetuity will be at the end of 3rd year and to find pv today we have to discount it for just 3years. So answer will be B.