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What is Perpetuity?


Let's understand Perpetuity.


  • A perpetuity is an annuity with no termination date, i.e., n goes to infinity



  • An example that resembles perpetuity is the dividends of preferred stock.

  • To calculate the present value of a perpetuity, we have,




  • When the first payment is made immediately, we have,



Written by: Kalpesh Agrawal (Jr. Actuarial Officer)


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