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Tobi owns a perpetuity that will pay $2000 a year, starting one year from now....

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Finance

Tobi owns a perpetuity that will pay $2000 a year, starting one year from now. He offers to sell you all of the remaining payments after the next 20 payments have been paid. What price should you offer him for payments 21 onward if you desire a rate of return of 10%? What does your offer price illustrate about the value of perpetuities?

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