Which of the following could be considered a form of perpetuity?
A)The college tuition payments that students make for four years.
B)A 20-year corporate bond.
C)A university scholarship endowment that promises to pay out $10,000 per year for an indefinite time period.
D)A contract from the winning lottery ticket to receive cash flows for the next 30 years.

Question

Quizplus · Accepted Answer

A perpetuity is a type of investment that pays out a fixed amount of income indefinitely. Option A and D have a limited time period of payment, while B has a fixed time period of payment. Only option C promises to pay a fixed amount indefinitely, making it a form of perpetuity.

Which of the Following Could Be Considered a Form of Perpetuity