Perpetuity
A perpetuity is a constant stream of cash flows without end. If you are thinking that per- petuities have no relevance to reality, it will surprise you that there is a well-known case of an unending cash flow stream: The British bonds called consols. An investor purchas- ing a consol is entitled to receive yearly interest from the British government forever.
How can the price of a consol be determined? Consider a consol that pays a coupon of C dollars each year and will do so forever. Simply applying the PV formula gives us: