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24 December, 12:11

The Jones Brothers recently established a trust fund that will provide annual scholarships of $12,000 indefinitely. These annual scholarships can best be described by which one of the following terms? A. Ordinary annuityB. Annuity dueC. Amortized paymentD. PerpetuityE. Continuation

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  1. 24 December, 12:22
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    D. Perpetuity

    Explanation:

    A perpetuity is a type of annuity that continues with no end, and payments continue indefinitely.

    The formular for perpetuity is

    Present value = Periodic payments/Interest rate

    For a example the United Kingdom issued a perpetuity call consols, they were perpetual bonds. Eventually they were redeemed in 2015.
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