Perpetuities, Payments That Never End

The endless annuity

Pricing preferred stock

The growing perpetuity

Why perpetuities anchor valuation

A perpetuity pays 100 dollars per year and the discount rate is 5 percent. What is its present value?

A preferred stock pays a fixed annual dividend of 4 dollars, and investors require a 6 percent return. At what price should the share trade?

A preferred share trades at 50 dollars and pays a 4 dollar annual dividend. What return does a buyer at this price expect?

A growing perpetuity will pay 100 dollars one year from now, growing 3 percent per year forever, with a discount rate of 8 percent. What is it worth today?

Why must the discount rate exceed the growth rate in the growing perpetuity formula?

Why does a perpetuity's value depend almost entirely on its early payments despite running forever?

In the growing perpetuity formula, the first payment is divided by the discount rate minus what other rate? Answer with one letter.

What one-word term names the fixed periodic payment made by preferred stock, analogous to a perpetuity payment? Answer in lowercase.

What one-word term names a stream of equal payments continuing forever? Answer in lowercase.

In the growing perpetuity, what mathematical condition must hold between r and g for a finite value? Answer with one symbol of comparison between the letters, such as x greater than y written in words.