Question
Which of the following explains why an infinite stream of cash flows (perpetuity) has a finite present value? Select one: A.Cash flows farther and farther
Which of the following explains why an infinite stream of cash flows (perpetuity) has a finite present value?
Select one:
A.Cash flows farther and farther in the future are discounted for so many years that the sum of the cash flows begins to approach zero, giving the present value of the entire cash flow stream a finite value.
B.Cash flows farther and farther in the future are discounted for so many years that the present value of each payment begins to approach zero, giving the present value of the entire cash flow stream a finite value.
C.Cash flows farther and farther in the future are discounted for so many years that the payment of each future value begins to approach zero, giving the present value of the entire cash flow stream a finite value.
D.Cash flows farther and farther in the future are discounted for so many years that the future value of each payment begins to approach zero, giving the present value of the entire cash flow stream an infinite value.
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Intermediate accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
7th edition
978-0077647094
