If your investment pays the same amount at the end of each year forever, the cash flow stream is called

Question

Quizplus · Accepted Answer

A cash flow stream that pays the same amount at the end of each year forever is called a perpetuity. This is because the payments continue perpetually, or indefinitely. An ordinary annuity, on the other hand, has a finite number of payments and ends after a certain period of time. An annuity due is similar to an ordinary annuity but the payments are made at the beginning of each period instead of at the end. Therefore, the best choice for this scenario is A, which is a perpetuity.

If Your Investment Pays the Same Amount at the End