Perpetuities and Annuities - Corporate Finance - Ivo Welch
Perpetuities and Annuities - Corporate Finance - Ivo Welch
Perpetuities and Annuities - Corporate Finance - Ivo Welch
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How can an infinite sum be worth less than infinite?<br />
Because each future cash flow is worth a lot less than the preceding<br />
cash flow. In the graph, the PV of each cash flow is the bar’s area.<br />
T=0 (now): Nada<br />
Cash Flows Forever <strong>and</strong> Ever<br />
0 1 2 3 4 5 6 7 8<br />
8/1