Multiple Choice
Which equation best represents the future value of a single sum after $n$ periods, assuming no compounding interest (i.e., using simple interest)?
22
views
10. Time Value of Money
Time Value of Money Equations
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
A perpetuity is defined as:
A
A series of equal payments made at regular intervals for a fixed period.
B
A series of increasing payments made at regular intervals for a fixed period.
C
A series of equal payments made at regular intervals that continue indefinitely.
D
A single payment made at a future date.
Verified step by step guidance1
Understand the concept of a perpetuity: A perpetuity is a type of annuity where equal payments are made at regular intervals and continue indefinitely, without an end date.
Recognize the key characteristics of a perpetuity: Payments are equal in amount, occur at consistent intervals, and do not have a termination point.
Compare the options provided in the problem: Evaluate each statement to determine which aligns with the definition of a perpetuity.
Eliminate incorrect options: For example, a perpetuity does not involve increasing payments, fixed periods, or single payments made at a future date.
Select the correct answer: Based on the definition, the correct answer is 'A series of equal payments made at regular intervals that continue indefinitely.'
5:55mWatch next
Master Time Value of Money and Using Timelines with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Time Value of Money Equations practice set
Problem sets built by lead tutorsExpert video explanations