Which of the Following Statements Regarding Growing Perpetuities Is False

question 30

Multiple Choice

Which of the following statements regarding growing perpetuities is false?

• A) We assume that r < g for a growing perpetuity.
• B) PV of a growing perpetuity =
• C) To find the value of a growing perpetuity one cash flow at a time would take forever.
• D) A growing perpetuity is a cash flow stream that occurs at regular intervals and grows at a constant rate forever.

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Definitions:

Variable Costs

Charges that adjust based on the degree of activity or output levels in an enterprise.

Profits

The financial gain achieved when the revenues from business activities exceed the expenses, costs, and taxes involved in sustaining the activity.

Revenue

The total amount of money generated by a company from its business activities, such as sales of products or services, before any expenses are deducted.

Futures Contract

A formal legal contract to purchase or sell a specific commodity or financial instrument at an agreed-upon price at a future date.