Perpetual annuity due – Texas Instruments Calculator User Manual
Page 35
Time-Value-of-Money and Amortization Worksheets
31
Perpetual annuity due
Because the term (1 + I/Y / 100)
-N
in the present value annuity equations
approaches zero as N increases, you can use these equations to solve for
the present value of a perpetual annuity:
•
Perpetual ordinary annuity
•
Perpetual annuity due
Example: Computing Present Value of Variable
Cash Flows
The ABC Company purchased a machine that will save these end-of-year
amounts:
Year
1
2
3
4
Amount
$5000
$7000
$8000
$10000
PV
PMT
I/Y
(
) 100
÷
----------------------------
=
PV
PMT
PMT
I/Y
(
) 100 )
⁄
----------------------------
+
=