Which of the Following Is TRUE About Perpetuities

question 68

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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