MBA Help - Finance

Perpetuities

A perpetuity is similar to an annuity, but it involves a never ending series of equal payments, effectively going on until infinity. As a result, the present value of a perpetuity is represented as an infinite time series:

Need help with your MBA?

  • Struggling with MBA coursework?
  • Worried about a forthcoming MBA exam?
  • Need to produce a SWOT analysis?

You need help from an experienced, MBA-qualified, expert.

We can provide you with your own expert, right now, for a fraction of their usual professional fees.

Our MBA-qualified experts can provide you with whatever you need - an essay, plan, outline, model answer, or even a complete SWOT analysis - in as little as 3 hours.

All of our experts are MBA qualified, and all currently practice in a business administration role.  You already know how good they are - they wrote this revision guide for you!

Click here to let us know your requirements or give us a call on 0115 966 7955.

PV   =   C / ( 1 + i )  +  C / ( 1 + i ) ^ 2  +  C / ( 1 + i ) ^ 3  + C / ( 1 + i ) ^ 4 + ...

Whilst it may seem that this would give an infinite PV, as the terms continually reduce in size they will ultimately converge on a finite value. As with the annuity, this value can be found by dividing by (1 + i):

PV / ( 1 + i )   =   C / ( 1 + i ) ^ 2  +  C / ( 1 + i ) ^ 3  +  C / ( 1 + i ) ^ 4  + ...

Subtracting the second equation from the first will eliminate all except the first term of the equation to give:

PV - PV / ( 1 + i )   =   C / ( 1 + i )

Multiplying by 1 + i and simplifying give:

i * PV = C

Hence PV = C / i

Other finance sections: