Problem: Describe the differences between perpetuities and annuities. Give examples of both types of products.
https://personal.vanguard.com/us/funds/byobjective/detail?category=LifeCycle
https://www.johnhancock.com/products/annuities.html
1. Find one example of a perpetuity.
2. Find one example of an annuity.
3. How is the perpetuity structured?
4. How is the annuity structured?
5. Why would an investor prefer one product over the other?
6. Keeping the time value of money in mind with respect to the initial cash out-lay, what does a preference of one product over the other say about the investors feeling of the time value of money?
7. How does the time value of money impact the eventual returns of both products?
8. If the investor had a short life expectancy, which investment would they prefer?
9. If the investor had a long life expectancy, which investment would they prefer?