Which of the Following Statements Regarding Perpetuities Is FALSE

question 35

Multiple Choice

Which of the following statements regarding perpetuities is FALSE?

• A)To find the value of a perpetuity one cash flow at a time would take forever.
• B)A perpetuity is a stream of equal cash flows that occurs at regular intervals and lasts forever.
• C)PV of a perpetuity =
• D)One example of a perpetuity is the British government bond called a consol.

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Definitions:

Owner's Equity

The total value of assets a business owner has rights to after all liabilities are paid off; equity for sole proprietorships.

Liabilities

Financial obligations or debts that a company owes to others, including loans, accounts payable, and mortgages.

Owner's Equity

The residual interest in the assets of an entity that remains after deducting its liabilities; also known as shareholders' equity for corporations.

Revenues

Income earned by a company from its business activities; essentially the gross income figure from which costs are subtracted to determine net income.