The present value formula shown above in the form of PV = C/r is the formula for a perpetuity.
What is a perpetuity?
- It is an investment that will keep paying out for an indefinite period of time.
- An example would be payments from an endowments to a charitable cause.
To find the value of a perpetuity, you simply divide the regular cash flow received by the interest rate given in the form:
= C / r
In conclusion, this is a perpetuity.
Find out more on perpetuities at https://brainly.com/question/17157614.
