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    Air Conditioner
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    A perpetuity is an annuity that makes periodic payments indefinitely. To calculate the present value of a perpetuity that pays Php300,000 annually with an interest rate of 5%, the formula is P = A/i, where A is the annual payment amount (Php300,000), and i is the interest rate (5%). Using this formula, the amount this man must invest at a 5% interest rate to receive Php300,000 annually is Php300,000/0.05 = Php6,000,000.

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    A perpetuity is an annuity that makes periodic payments indefinitely. To calculate the present value of a perpetuity that pays Php300,000 annually with an interest rate of 5%, the formula is P = A/i, where A is the annual payment amount (Php300,000), and i is the interest rate (5%). Using this formula, the amount this man must invest at a 5% interest rate to receive Php300,000 annually is Php300,000/0.05 = Php6,000,000.

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    17 views4 pages

    Perpetuities

    Uploaded by

    Air Conditioner
    A perpetuity is an annuity that makes periodic payments indefinitely. To calculate the present value of a perpetuity that pays Php300,000 annually with an interest rate of 5%, the formula is P = A/i, where A is the annual payment amount (Php300,000), and i is the interest rate (5%). Using this formula, the amount this man must invest at a 5% interest rate to receive Php300,000 annually is Php300,000/0.05 = Php6,000,000.

    Copyright:

    © All Rights Reserved
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    PERPETUITIES

    Presented by: John Adrian M. Dimabuyu


    PERPETUITY
    A perpetuity is an annuity in which the periodic
    payments begin on a fixed date and continue
    indefinitely.

    P = A/i Where:
    A = Periodic Payments
    A = Pi P = Present Value
    i = Interest rate
    i = A/P
    Problem:
    A man, pondering of retirement, determined that
    Php300,000 per year will be sufficient for him to live
    without the need of work. Upon his retirement, how
    much must he invest in a bank that offers 5% interest
    rate to receive the amount every year continuously?

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