Annuities and Perpetuities

There are investment vehicles that pay a fixed amount each year, these are known as annuities. Some will even pay an amount on a regular basis into infinity, these are known as perpetuities. We examine how to calculate the present value of annuity (PVA) and how this stream of payments reflects those typically demanded on mortgage loans. Finally we look at the features of perpetuities and the different forms they can take.