Consider investing in a technology that reduces your annual costs by $10,000 into perpetuity. If the annualized discount rate is 4%, then what is the present value of the benefits from investing in the technology?

$250,000

Explanation:

A perpetuity is an indefinite cashflows ; meaning they occur forever.

Formula for the present value of perpetuity  is as follows;

Present value of perpetuity = CF / rate

Recurring cashflow = 10,000

discount rate; r = 4% or 0.04 as a decimal

PV of perpetuity = 10,000/0.04

PV of perpetuity = 250,000

Therefore, the present value of the benefits from investing in the technology would be $250,000