the present value of a series of payments of 2000 at the end of every four quarter, forever, is equal to 5000. calculate the effective rate of interest per quarter

The effective rate of interest per quarter is 40%.

Step-by-step explanation:

This can be calculated using the formula for calculating the Present Value of a Perpetuity as follows:

PV = A / r (1)

Where;

PV = Present value of the series of payments = $5,000

A = Quarterly payment = $2,000

r = Quarterly effective rate of interest = ?

Substituting the values into equation (1) and solve for r, we have:

5,000 = 2000 / r

5,000 * r = 2,000

r = 2,000 / 5,000

r = 0.40, or 40%

Therefore, the effective rate of interest per quarter is 40%.

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