Perpetuities are also called annuities with an extended or unlimited life. Based on your understanding of perpetuities, answer t
he following questions. 1. Which of the following are characteristics of a perpetuity?
Check all that apply.
A. A perpetuity is a stream of unequal cash flows.
B. A perpetuity is a stream of regularly timed, equal cash flows that continues forever.
C. The value of a perpetuity cannot be determined.
D. The value of a perpetuity is equal to the sum of the present value of its expected future cash flows.
The correct answers are letters "B" and "D": A perpetuity is a stream of regularly timed, equal cash flows that continues forever; The value of a perpetuity is equal to the sum of the present value of its expected future cash flows.
Explanation:
Perpetuity means endless. In finance, a perpetuity is a flow of money that will be regularly received without a specified end date. The definition of perpetuity is used when determining an annuity's present value. The formula for this is:
<em>PV</em><em> = present value
</em>
<em>C</em><em> = cash flow
</em>
<em>R</em><em> = discount rate
</em>
In other words, perpetuity equals the sum of the present value of the stream of future cash flows.
Based on the information provided within the question it can be said that in this scenario Scott has conceptualized the concept of "minority owned". This term refers to when an individual creates an abstract but very simplified view of something. Which in this case he gave the term "minority owned" a simplified definition of being only owned by women or African Americans, when there can be many other minorities in a certain area.
The first step in making a choice is to define the issue at hand. When making judgments, related costs and benefits should be evaluated. When making judgments, extraneous costs and advantages should be overlooked.
