Which one of the following would have the greatest value assuming each has a Year 0 cash flow of zero and a Year 1 annual cash flow of $100? Assume a discount rate of 8 percent,compounded annually.Also,assume any growth rate is positive.

Question

Quizplus · Accepted Answer

A growing perpetuity has the greatest value because it provides an infinite series of cash flows that grow at a constant rate, which increases the present value compared to a non-growing perpetuity or a finite annuity.

Which One of the Following Would Have the Greatest Value