Which of the Following Is True About Perpetuities

question 20

Multiple Choice

Which of the following is true about perpetuities?

• A) Since a perpetuity generates cash flows every period infinitely, the cash flow generated equals the PV times the interest rate.
• B) Since a perpetuity generates cash flows every period infinitely, each cash flow must be discounted to calculate the present value.
• C) Since a perpetuity generates cash flows every period infinitely, there is no way to solve for the cash flow given the present value and the interest rate.
• D) A perpetuity does not generate cash flows every period infinitely.
• E) Since a perpetuity generate cash flows every period infinitely, the cash flow generated equals the PV divided by the interest rate.

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Definitions:

Promotional Mix

The combination of marketing tools used to effectively communicate with the target audience and promote a product or service.

Personal Selling

A direct face-to-face marketing approach where sales personnel interact with potential buyers to explain or demonstrate the features of a product or service.

Nonpersonal Selling

Marketing activities that do not involve direct communication between sales representatives and customers, including advertising, public relations, and direct mail.

Trade Shows

Events where companies in a specific industry gather to showcase and demonstrate their new products and services, often to potential clients and investors.