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Calculating a Perpetuity

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What is the difference between accumulated cash flows and simple cash flows in the context of calculating a perpetuity?

A

Current cash flow in the formula of Rate / Cash Flow only assesses the one year of dividend receipt, but then applies it on the basis of perpetual growth.

B

Current cash flow in the formula of Cash Flow / Rate only assesses the one year of dividend receipt, but then applies it on the basis of perpetual growth.

C

Accumulated cash flows in the formula of Rate / Accumulated Cash Flow is designed to calculate all of the possible cash flows related to the stock over time, then apply it on the basis of perpetual growth.

D

Accumulated cash flows in the formula of Accumulated Cash Flow / Rate is designed to calculate all of the possible cash flows related to the stock over time, then apply it on the basis of perpetual growth.