You have received news about an inheritance that will pay you $5,000 next year. Beginning the following year, your inheritance will increase by 5 percent every year forever. This is a growing perpetuity.

Question

Quizplus · Accepted Answer

A growing perpetuity is an annuity that grows indefinitely, with payments increasing at a constant rate each period. In this case, the inheritance payment is set to increase by 5 percent every year forever, making it a growing perpetuity.

You Have Received News About an Inheritance That Will Pay