Perpetuities

(How to trick the BA II Plus into solving this problem)

An annuity is a payment that theoretically goes to infinity. There is no way to enter infinity into the N on the calculator. However, the formula for this problem is simple. You only need to divide the payment by the interest rate. Say the payment is $3,000 and the interest rate is 9% then when we divide the $3,000/0.09 it comes to $33,333.33.

Say you can’t recall this and you wish to use your BA II plus calculator. Try tricking it by entering 500 into the N value

Enter 5000 then press N

Enter 9 then press I/Y

Enter 3000then press PMT

After this enter CPT and then press PV you should have gotten 33,333.33 which is $33,333.33

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