Row 3 Finally, look at the investment shown in the third row of Figure 2.7 . This provides a
level payment of $1 a year for each of three years. In other words, it is a three-year annuity. You
can also see that, taken together, the investments in rows 2 and 3 provide exactly the same cash
payments as the investment in row 1. Thus the value of our annuity (row 3) must be equal to
the value of the row 1 perpetuity less the value of the delayed row 2 perpetuity: