What is the present value of a perpetuity paying $1,000 annually at an interest rate of 10%?

Explanation

Core Concept: The formula for the Present Value (PV) of a perpetuity is PV = Cash Flow / Discount Rate (PV = C / r). Here, PV = 1000 / 0.10 = $10,000. Context/Distractors: Options A, B, and D result from incorrect arithmetic or using compounding factors instead of perpetuity division. Exam Tip/Key Fact: A perpetuity provides continuous cash flows infinitely with no terminal maturity date.