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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Definitions:

Latency Stage

A phase in Freud’s psychosexual development occurring between ages 6 and puberty, where sexual urges are repressed, and children focus on social and intellectual skills.

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The ability to resist the temptation for an immediate reward and wait for a later reward.

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A unique set of emotional, thought, and behavioral patterns that define an individual's typical responses to situations.

Pleasure Principle

A theory in psychoanalytic psychology proposing that people seek pleasure and avoid pain to satisfy biological and psychological needs.