This video explain an EXTREMELY IMPORTANT calculation that many students find confusing. The present value of "ordinary" perpetuity formula (PV = C/r) can only be used when the FIRST cash flow is occurring one timeperiod into the future.

However, there can be instances where the perpetuity is "delayed", i.e. the first cash flow occurs MORE than one year into the future (You will see applications of this in more advance finance classes). In such cases, the PV = C/r "ordinary" perpetuity formula needs to be augmented. In this video, I explain how (using an example).

ABOUT ME:

My name is Atif Ikram. I am a member of the finance faculty at Arizona State University's W.P. Carey School of Business (https://wpcarey.asu.edu/people/profil.... I love to teach! Over the past few years, I have taught a variety of economics and finance courses to undergraduate and graduate students at Rutgers University, Wayne State University, and Lahore University of Management Sciences (LUMS, Pakistan). Presently I teach advance corporate finance courses at ASU.

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