Attention: Due to a bug in Google Chrome, this page may not function correctly. Click here to learn more. 4. Perpetuities Aa Aa Perpetuities are also called annuities with an extended, or unlimited, life. Based on your understanding of perpetuities, answer the following questions. Which of the follow ing are characteristics of a perpetuity? Check all that apply. The value of a perpetuity cannot be determined The current value of a perpetuity is based more on the discounted value of its nearer (in time) cash flows and less by the discounted value of its more distant (in the future) cash flows. The value of a perpetuity is equal to the sum of the present value of its expected future cash flows. A perpetuity is a stream of unequal cash flows. Your grandfather wants to establish a scholarship in his father's name at a local university and has stipulated that you will administer it. As you've committed to fund a $25,000 scholarship every year beginning you'll want to set aside the money for the scholarship immediately. At tomorrow's meeting wiith your grandfather and the bank's representative, you will need to deposit can fund the scholarship forever, assuming that the account will eorn 4.50% per annum every year. one year from tomarrow, $555,556 (rounded to the nearest whole dollar) so that you Oops! The bank representative just reported that he misquoted the available interest rate on the scholarship's account. Your account should earn 7.00%. The amount of your required deposit should be revised to $357,143 This suggests there is relationship between the interest rate earned on the account and the present value of the perpetuity Type here to search