Answer:
Perpetuities are used to value securities like stocks and bonds.
Examples of perpetuities are life insurance policies that offer annuity benefits to the nominee after the death of the policyholder.
Scholarship funds are another example of perpetuities
<h3>Explanation:</h3>
Year Cash flow PV factor = (1/(1.05)n)) PV of annuity
1 1 0.9524 1 * 0.9524 = 0.9524
2 1 0.907024 1 * 0.907024 = 0.907024
3 2 0.86383 2 * 0.86383 = 1.72767
4 1 0.822702 1 * 0.822702 = 0.822702
5 1 0.78352 1 * 0.78352 = 0.78352
6 3 0.74621 3 * 0.74621 = 2.2386
7 1 0.71068 1 * 0.71068 = 0.71068
8 1 0.67683 1 * 0.67683 = 0.67863
9 4/0.5 = 80 0.64460 80 * 0.64460 = 51.5687
Total PV - - 60.389
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