We will follow-up the basic perpetuity with a delayed perpetuity. Watch the Chapter 5 Part 2 video for an example of a delayed perpetuity

Consider a perpetuity that pays $800 each year forever with the first payment occuring at the end of year 5. The interest rate is 6.2%.

I start by calculating the value of the perpetuity (800 / 0.062) and this is $12,903.2258. Where in the timeline does this value belong?

		At the end of year 4 (one year before the first cash flow)
		At the end of year 5 (the same year as the first cash flow)
		At year 0 (since this is the present value)
		At year 6 (one year after the first cash flow)