QuestionDecember 14, 2025

3. Which cash flow stream is a perpetuity? A. Payments for 5 years B. Payments forever C. Payments growing at 5% for 3 years D. Payments until maturity

3. Which cash flow stream is a perpetuity? A. Payments for 5 years B. Payments forever C. Payments growing at 5% for 3 years D. Payments until maturity
3. Which cash flow stream is a perpetuity?
A. Payments for 5 years
B. Payments forever
C. Payments growing at 5%  for 3 years
D. Payments until maturity

Solution
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Answer

B. Payments forever Explanation 1. Identify the definition of a perpetuity A perpetuity is a series of equal or periodic payments that continue indefinitely, with no end date. 2. Match the option with the definition Only “Payments forever” describes an infinite or perpetual cash flow.

Explanation

1. Identify the definition of a perpetuity<br /> A perpetuity is a series of equal or periodic payments that continue indefinitely, with no end date. <br /><br />2. Match the option with the definition<br /> Only “Payments forever” describes an infinite or perpetual cash flow.
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