What is an annuity where the payment period extends indefinitely?

A perpetuity is a financial instrument that pays a fixed amount at regular intervals indefinitely. This means that there is no end date to the payments, which distinguishes it from other types of annuities that have a set period for payments.

In the context of financial products, an ordinary annuity typically has a defined lifespan for payments, often ending after a fixed number of periods, such as years. Similarly, an annuity due makes payments at the beginning of each period but also has a limited duration for its payouts. Depreciation, on the other hand, refers to the reduction in value of an asset over time and is not related to annuity payments.

Perpetuities are often seen in investments such as certain types of bonds or preferred stocks, where investors receive consistent payments forever. The mathematical treatment of a perpetuity allows for the calculation of its present value, assuming a constant payment and a specified discount rate. This characteristic of ongoing payments without a termination point is what clearly identifies a perpetuity among other financial options.