This presentation is about perpetuity.

1. Perpetuity
Dr. Daoud Kiomjian
10-26-2020
Ruba Alsoheil

2. Perpetuity is a type of
Annuity.
Annuity is a continuous
stream of payments made at
equal intervals for a specific
amount of time

3. Example
500$
0 1 2 3 4 5
500$ 500$ 500$ 500$
When stream of payments continues forever
or for indefinite amount => perpetuity
infinity
500$

4. The perpetuity value
is infinite , but the
present value is
LIMITED
The value of 500$
after 99 years with a
rate of 10% is0.04$

5. ,So the present value of our previous example for
infinite continuous payment is 500/0.1= 5000$

6. REAl Life examples
1.WAR LOANS
• Britsh government still
pays a perpetual debt
from World War I
2.
• The French government
pays 1000 livres per
year to a lawyer’s until
the death of its last
descendent
3.
• The Shareholder is
entitled to get certain
amount of dividends
after paying for the
stock prices

7. Thanks
Any questions?

8. Corporatefinanceinstitute.(2020). Perpetuaity.
Retrieved from :
https://corporatefinanceinstitute.com/resource
s/knowledge/finance/perpetuity/