# Question

Look at the formula for the present value of an annuity. What happens to the present value as the number of periods increases? What distinguishes an annuity from a perpetuity? Why is there no formula for the future value of a perpetuity?

## Answer to relevant Questions

Suppose you borrow a large sum of money to buy a house, and you will pay back the loan over thirty years making fixed monthly payments. After fifteen years have passed, will you have paid off half the loan principal, more ...You have saved $10,000 toward a down payment on a home. The money is invested in an account earning 7% interest. You will be ready to purchase the new home once your savings account grows to $25,000. a. Approximately how ...For the following questions, assume an annual annuity of $1,000 and a required return of 12%. a. What is the future value of a ten-year ordinary annuity? b. If you earned an additional year’s worth of interest on this ...For the following questions, assume an end-of-year cash flow of $250 and a 10% discount rate. a. What is the present value of a single cash flow? b. What is the present value of a 5-year annuity? c. What is the present value ...Hector Garcia has shopped around for the best interest rates for his investment of $10,000 over the next year. He has found the following: Stated Rate Compounding 6.10%........................................ ...Post your question

0