Texas Instruments BA II PLUS - 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 ) ⁄
---------------------------- + =