crazyskater3475 crazyskater3475

04-11-2022
Business

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what is the future value of a perpetuity paying $100 annually? assume an interest rate of 10% and cash flows at the end of each period? a. can not be determined b. $11,096.27 c. $1000 d. $1,438.27

Answer :

varshamittal029 varshamittal029

16-11-2022

a. can not be determined

As there is no end date mentioned in statement, future value can not be calculated.

What is Perpetual Annuity?

A Perpetual Annuity is an annuity with no end. It lasts forever. A fixed amount is paid with no fixed period. It is an annuity with no termination date. It is a security that pays a never-ending cash flow. Main difference between annuity and perpetuity is that an annuity has a fixed period but perpetuity does not

Therefore, a Perpetuity does not have any future value because it requires a future date specifically

A fixed payment made over a fixed length of time is known as an annuity.

Perpetuities are predetermined payments that are received in perpetuity. The specified interest rate must be compounded in order to value an annuity. The actual interest rate is used to value perpetuities.

However

Perpetuity's PV is calculated by dividing the cash flow amount by the rate of interest.

Hence, answer is Future Value can not be determined

To know more about Perpetuities refer

https://brainly.com/question/28518388

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