An asset characterized by cash ﬂows that increase at a constant rate forever is called a:

Question

Quizplus · Accepted Answer

A growing perpetuity is an asset that generates cash flows that increase at a constant rate indefinitely into the future. This is in contrast to a regular perpetuity, which generates constant cash flows indefinitely into the future. A growing perpetuity is an important concept in finance, as it can help investors to value assets such as stocks and bonds that have a growing stream of cash flows. Therefore, the best choice is A.

An Asset Characterized by Cash ﬂOws That Increase at a Constant