Question

Which one of the following accurately defines a perpetuity? A. a limited number of equal payments paid in even time increments B. payments of equal amounts that are paid irregularly but indefinitely C. varying amounts that are paid at even intervals forever D. unending equal payments paid at equal time intervals E. unending equal payments paid at either equal or unequal time intervals

Answer 1

Answer:D.unending equal payments paid at equal time intervals

Explanation:

What is a perpetuity?

A perpetuity is a instance in which money is paid continuously for every equal time interval and this is payment is infinite.in

This cash flow occurs now up to forever

Although this is only theorical that the cash flow payment can go on forever but there are related examples which can be explained as perpetuity such as real estate and certain types of bonds.

In the UK for example there is government bond which is called Consol. Under Consol people with bonds get annual fixed coupons as long as they still have hold unto those bonds and if the government doesn't stop the Consol.

The real estate is also an example in which a person but property for the purpose of renting it out , people will keep paying the owner as long as the property is still there to rent out.