Which of the following statements regarding perpetuities is false? a. a perpetuity is a stream of equal cash flows that occurs at regular intervals and lasts forever. b. to find the value of a perpetuity by discounting one cash flow at a time would take forever. c. pv of a perpetuity = startfraction r over upper c endfraction d. one example of a perpetuity is the british government bond called a consol.

The answer is: C) PV of a perpetuity = StartFraction r Over Upper C EndFraction (I guess this means PV = r / C, which is FALSE)

Explanation:

The formula for calculating the present value of a perpetuity is:

                        PV = C / r

Where PV = Present Value, C = cash flow, r = discount rate.

A perpetuity is a stream of equal cash flows that lasts forever (perpetually).

The formula for calculating the present value of a perpetuity is simple, so there is no reason to spend time calculating the present value of each cash flow, since there are infinite cash flows.

A consol bond s a type of perpetuity issued by the British government (also by the US government)

answer; complain or request hazard correction from your employer;

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