9. Perpetuities Aa Aa E Perpetuities are also called annuities with an extended, or unlimited, life. Based on your understanding of perpetuities, answer the following questions. Which of the following are characteristics of a perpetuity? Check all that apply. The present value of a perpetuity is calculated by dividing the amount of the payment by the investor's opportunity interest rate. The principal amount of a perpetuity is repaid as a lump-sum amount. In a perpetuity, returns-in the form of a series of identical cash flows-are earned. A perpetuity continues for a fixed time period. A local bank's advertising reads: "Give us $25,000 today, and we'll pay you $400 every year forever." If you plan to live forever, what annual interest rate will you earn on your deposit? 1.60% 1.44% 2.56% 2.24% Oops! When you went in to make your deposit, the bank representative said the amount of required deposit reported in the advertisement was incorrect and should have read $37,500. This revision, which will the interest rate earned on your deposited funds, will adjust your earned interest rate to