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It is not possible to solve a perpetuity question without an end date for the periodic payments.

a. true
b. false

1 Answer

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Final answer:

The statement questioning the possibility of solving perpetuity without an end date is false. Perpetuities involve payments with no end date and their present value can be calculated using a specific formula.

Step-by-step explanation:

When answering the question, "It is not possible to solve a perpetuity question without an end date for the periodic payments," the correct response would be false. A perpetuity, by definition, does not have an end date; the periodic payments are considered to go on forever. Actual calculations of perpetuities involve determining the present value of these infinite cash flows by using a formula that does not require an end date. For example, the present value of a perpetuity can be calculated using the formula PV = P/r, where PV is the present value, P is the payment per period, and r is the interest rate. This formula allows us to calculate a finite present value for an infinite series of payments.

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