We have often discussed the formulas for the present value of a perpetuity perpetuity) and the present value of an ordin

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We Have Often Discussed The Formulas For The Present Value Of A Perpetuity Perpetuity And The Present Value Of An Ordin 1 (69.65 KiB) Viewed 21 times

pls go into depth on each part, I am a 5 year old learning thismaterial. Not really, but explain it as that. Thank you
We have often discussed the formulas for the present value of a perpetuity perpetuity) and the present value of an ordinary annuity (aka: finite series of cash flows): PV = CF T CF PV = 1=1 (1+r)i (1) (II) CF =1 (1+r)i CF as n With CF > 0 and 0 <r < 1. We know that PV = converges to PV = approaches ∞. ITech Geek management is confused about this concept. In particular, they do not understand how this impacts real estate valuations. First, illustrate to ITech Geek that this is so and why is it important in terms of valuation of any financial asset. Second, show how this "quick and dirty" estimate of pricing applies to real estate valuation. Σ=1