Which of the Following Statements Regarding Perpetuities Is FALSE

question 31

Multiple Choice

Which of the following statements regarding perpetuities is FALSE?

• A) To find the value of a perpetuity by discounting 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.

---

Definitions:

Loss

An economic condition where expenses exceed revenues, indicating negative financial performance.

Profit-Maximizing

A strategy or process by which a firm determines the price and output level that returns the greatest profit.

Loss-Minimizing

A strategy or point where a firm attempts to reduce its losses to the lowest possible level when it cannot achieve profitability.

Efficient Output Level

The quantity of production that maximizes a firm's profit by equating marginal cost and marginal revenue.