Question
You are considering two perpetuities which are identical in every way except for the when the perpetuity payments will begin. Perpetuity A will begin making
You are considering two perpetuities which are identical in every way except for the when the perpetuity payments will begin. Perpetuity A will begin making annual payments of a fixed amount, with the first payment being made two years from today. Perpetuity B pays the same fixed annual payment but will make the first payment one year from today. Which of the following statements is most correct?
a. The PV of perpetuity A is greater than the PV of perpetuity B by the amount of the fixed payment.
b. The PV of perpetuity B is greater than the PV of perpetuity A by the amount of the fixed payment.
c. The PV of perpetuity A is equal to the PV of perpetuity B.
d. The PV of perpetuity A is greater than the PV of perpetuity B by the present value of the amount of the fixed payment.
e. The PV of perpetuity B is greater than the PV of perpetuity A by the present value of the amount of the fixed payment.
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Labour Finance And Inequality
Authors: Suzanne J. Konzelmann, Simon Deakin, Marc Fovargue-Davies, Frank Wilkinson
1st Edition
1138919721, 978-1138919723
