B18 Perpetuities Flashcards
1
Q
what is a Perpetuity
A
annuity whose payments continue forever
2
Q
what is a Perpetuity immediate
A
annuity with payments at the end of each period forever.
3
Q
what is the formula for the present value of a perpetuity-immediate with periodic payments of 1?
A
a angle ∞ i = 1/i
4
Q
what is a perpetuity-due?
A
a perpetuity-due is an annuity with payments at the beginning of each period forever
5
Q
what is the formula for the present value of a perpetuity-due with periodic paymetns of 1?
A
ä angle ∞ i = 1/d
