Which of the following is TRUE about perpetuities?
A)All else equal,the value of a perpetuity is higher when the periodic cash flow is lower.
B)All else equal,the value of a perpetuity is higher when the interest rate is higher.
C)If two perpetuities have the same present value and the same interest rate,they must have the same cash flows.
D)All else equal,the value of a perpetuity is lower when the interest rate is lower.
E)If two perpetuities have the same cash flows,they must have the same present value.

Question

Quizplus · Accepted Answer

If two perpetuities have the same present value and the same interest rate, they must have the same cash flows, as the present value of a perpetuity is determined by dividing the cash flow by the interest rate.

Which of the Following Is TRUE About Perpetuities