Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 14. perpetuities perpetuities are also called annu

14. Perpetuities Perpetuities are also called annuities with an extended, or unlimited, life. Based on...

80.2K

Verified Solution

Question

Accounting

image

14. Perpetuities Perpetuities are also called annuities with an extended, or unlimited, life. Based on your understanding of perpetuities, complete the following exercises. Which of the following are characteristics of a perpetuity? Check all that apply. The principal amount of a perpetuity is repaid as a lump-sum amount. A perpetuity is a series of regularly timed, equal cash flows that is assumed to continue indefinitely into the future The present value of a perpetuity is calculated by dividing the amount of the payment by the investor's opportunity interest rate A perpetuity continues for a fixed time period A local bank's advertising reads: "Give us $10,000 today, and we'll pay you $800 every year forever." If you plan to live forever, what annual interest rate will you earn on your deposit? 6.40% 12.80% 8.00% 7.20% Oops! When you went in to make your deposit, the bank representative said the amount of required deposit reported in the advertisement was incorrect and should have read $15,000. This revision, which will rate earned on your deposited funds, will adjust your earned interest rate to the interest

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students