Perpetual Annutiy. How do I get the answer?

You are considering buying a perpetual annuity which costs $10,000 now upfront.

You could instead invest in a CD and earn 4% (your discount rate).

What is the minimum yearly payout you require to buy this annuity?
a) $101
b) $401
c) $1001
d) $10,001

NPV of perpetuity is A/r, where r is discount rate, and A is the amount you receive each year, starting a year from now.

Since there is no other info, take 4%=0.04 is your discount rate.

You want your perpetuity to have higher NPV than 10K, so you want A larger than 10000*0.04=400, so b is the answer.