The present value of a perpetuity is equal to the payment on the annuity, PMT, divided bythe interest rate, I : PV = PMT/I. What is the future value of a perpetuity of PMT dollars peryear? (Hint: The answer is infinity, but explain why.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
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The present value of a perpetuity is equal to the payment on the annuity, PMT, divided by
the interest rate, I : PV = PMT/I. What is the future value of a perpetuity of PMT dollars per
year? (Hint: The answer is infinity, but explain why.)

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