What is the present value of $100 PERPETU I TY of the interest rate is 7%? If interest rates doubled to 14%, what would its present value be? At 7% hundred dollars multiplied 0.943 equals 9430 or is it 14.2857 multiplied 100 equals 1428. 57? At 14% is it $100 times 0.877 equals $87.70 or is it 1428.57×2?
.07x = 100
x = 100/.07 = 1428.57
check:
If you had $1428.57 then annual interest at 7% is $100. So you use that to pay your charity or scholarship or whatever, and the balance would remain at 1428.57, allowing you to do this forever.
Interest = 1428.57(.07)(1) = 99.9999 or 100.00
What do you think you should for an interest rate of 14% ??
From where did you get .943 ??