A local bank advertises the following deal: "Pay us $100 at the end of each year for 10 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever." a. Calculate the present value of your payments to the bank if the interest rate is 5.50%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the present value of a $100 perpetuity deferred for 10 years if the interest rate is 5.50%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

1. $753.76

2. $1064.42

3.yes

Explanation:

Interest rate = 5.50% = 0.055

Period = 10years

Present value (PV) =

The present value of cash flow Is calculated by:

PV = 100/0.055*(1- (1/(1 + 0.055)^10))

PV = 100/0.055 × (1 - (1 / 1.055^10))

PV = 1818.18181818181818 × (1 - 0.58543057942760689)

PV = 753.762582858896555

2.) Present value of perpetuity:

100/(1 + 0.055)^11 × [1/(1 - (1/1 + 0.055))]

[100/1.055^11] × [1/(1 - 0.947867298]

55.4910501827115539 × 19.181817

= 1064.4192

3.) Yes, as it yield a greater value

these are the four factors that influence enterpreneurship development

1. economic development

2. culture

3.technological development

4. education