Answer:
The correct response is Option b (1.60%).
Explanation:
According to the question,
Initial investment,
= $50,000
Perpetual annual cash flows,
= $800
Now,
The interest rate will be:
= [tex]\frac{Perpetual \ annul \ cash \ flows}{Initial \ investment}[/tex]
On substituting the given values, we get
= [tex]\frac{800}{50,000}[/tex]
= [tex]0.016[/tex]
i.e.,
= [tex]1.60 \ percent[/tex]