perpetuity

Examples of perpetuity in the following topics:

• Calculating Perpetuities

  • Perpetuities are a special type of annuity; a perpetuity is an annuity that has no end, or a stream of cash payments that continues forever.
  • There aren't many actual perpetuities, but the United Kingdom has issued them in the past.
  • To find the FV of a perpetuity would require setting a number of periods which would mean that the perpetuity up to that point can be treated as an ordinary annuity.
  • There is, however, a PV formula for perpetuities .
  • The PV of a growing perpetuity is represented as $PVGP \ = \ {A \over ( i - g )}$ .

• Perpetual vs. Periodic Counting

  • Perpetual inventory updates the quantities continuously and periodic inventory updates the amount only at specific times, such as year end.
  • Perpetual inventory, also called continuous inventory, is when information about amount and availability of a product is updated continuously.
  • A company using the perpetual inventory system would have a book inventory that is exactly (within a small margin of error) the same as the physical (real) inventory.
  • Perpetual inventory systems can still be vulnerable to errors due to overstatements (phantom inventory) or understatements (missing inventory) that occurs as a result of theft, breakage, scanning errors, or untracked inventory movements.
  • While the perpetual inventory method provides a close picture of the true inventory information, it is a good idea for companies using a perpetual inventory system to do a physical inventory periodically.

• Reporting Inventories

  • There are ways to account for inventory, periodic and perpetual.
  • The perpetual inventory system requires accounting records to show the amount of inventory on hand at all times.

• LIFO Method

  • LIFO under perpetual inventory procedure: Under this procedure, the inventory composition and balance are updated with each purchase and sale.
  • Applying LIFO on a perpetual basis during the accounting period, results in different ending inventory and cost of goods sold figures than applying LIFO only at year-end using periodic inventory procedure.
  • For this reason, if LIFO is applied on a perpetual basis during the period, special inventory adjustments are sometimes necessary at year-end to take full advantage of using LIFO for tax purposes.
  • Applying LIFO on a perpetual basis during the accounting period, results in different ending inventory and cost of goods sold figures than applying LIFO only at year-end using periodic inventory procedure.
  • For this reason, if LIFO is applied on a perpetual basis during the period, special inventory adjustments are sometimes necessary at year-end to take full advantage of using LIFO for tax purposes.

• Expected Dividends and Constant Growth

  • The PEG ratio is a special case in the Sum of Perpetuities Method (SPM) equation.
  • Derived from the compound interest formula using the present value of a perpetuity equation, SPM is an alternative to the Gordon Growth Model.

• The Dynamics of Poverty

  • This perpetuation of deprivation is the cycle of poverty.
  • In this way, inadequate or lack of education can perpetuate poverty.
  • This limits their ability to improve their economic position, again perpetuating poverty.

• Calculating Annuities

  • An annuity is essentially a loan, a multi-period investment that is paid back over a fixed (or perpetual, in the case of a perpetuity)  period of time.
  • Generally speaking, annuities and perpetuities will have consistent payments over time.

• The Production of Electromagnetic Waves

  • Once in motion, the electric and magnetic fields created by a charged particle are self-perpetuating—time-dependent changes in one field (electric or magnetic) produce the other.

• The Feminist Perspective

  • Feminists view the family as a historical institution that has maintained and perpetuated sexual inequalities.

• Nature of Inventory

  • There are two principal systems for determining inventory quantities on hand: periodic and perpetual system.
  • It does lack some of the planning and control benefits of the perpetual system.
  • The perpetual system requires continuous recording of receipt and disbursement for every item of inventory.