Although most financial instruments offer a certain rate for a fixed period of time, there are certain instruments that offer a certain rate forever. Such instruments are called ‘Perpetuity’.
Two most common calculations pertain to calculating the value of an annuity that offers the same rate throughout and one that increases payments at a particular rate throughout.
Some people think that since the payments keep coming in forever, it is impossible to value an annuity. Well, there is a way to do it, and good news is that’s very simple!
Check out the attached Microsoft Excel Sheet “Annuities in Action” to find out how!