Annuity (finance Theory) - Perpetuity

A perpetuity is an annuity for which the payments continue forever. Since:


lim_{n,rightarrow,infty},PV(i,n,R),=,frac{R}{i}

even a perpetuity has a finite present value when there is a non-zero discount rate. The formula for a perpetuity are:


a_{overline{infty}|i} = 1/i;qquad ddot{a}_{overline{infty}|i} = 1/d.

where is the interest rate and is the effective discount rate.

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Famous quotes containing the word perpetuity:

    These semi-traitors [Union generals who were not hostile to slavery] must be watched.—Let us be careful who become army leaders in the reorganized army at the end of this Rebellion. The man who thinks that the perpetuity of slavery is essential to the existence of the Union, is unfit to be trusted. The deadliest enemy the Union has is slavery—in fact, its only enemy.
    Rutherford Birchard Hayes (1822–1893)