11% is the applicable discount rate.
Amount per year = $50
Present value of this perpetuity = $454.55
discount rate = amount per year / present value of perpetuity × 100
= 50 / 454.55 × 100
= 11%
The discount rate is the interest fee charged to industrial banks and different economic establishments for short-time period loans they take from the Federal Reserve bank. the bargain fee refers back to the hobby charge utilized in discounted cash flow (DCF) evaluation to determine the existing cost of future coins flows.
The discount rate is the hobby fee used to decide the present cost of destiny cash flows in discounted coins go with the flow (DCF) analysis. This allows deciding if the destiny coins flow from a task or investment could be well worth more than the capital outlay needed to fund the mission or funding within the gift.
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