Answer:
$21,370.1071
Explanation:
The computation of the present value of this perpetuity is shown below:
= The present value after five years + present value on the date of purchase
where,
The present value after five years is
= ($1,000) ÷ (1.04)^5
= $821.9271
And, the present value on the date of purchase is
= $821.9271 ÷ 4%
= $20,548.18
Hence, the present value of the perpetuity is
= $821,.9271 + $20,548.18
= $21,370.1071
