Which of the following is true about perpetuities?
A) A perpetuity does not generate cash flows every period infinitely.
B) Since a perpetuity generates cash flows every period infinitely, each cash flow must be discounted to calculate the present value.
C) Since a perpetuity generates cash flows every period infinitely, the cash flow generated equals the PV times the interest rate.
D) Since a perpetuity generates cash flows every period infinitely, there is no way to solve for the cash flow given the present value and the interest rate.
Correct Answer:
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