Ad Infinitum


DEFINITION of 'Ad Infinitum'

A Latin phrase meaning "to infinity" - in other words, forever. In finance, the term is associated with a perpetuity, in which the payments derived from an asset at fixed intervals are assumed to go on forever and ever, or ad infinitum.

BREAKING DOWN 'Ad Infinitum'

Payments received ad infinitum do indeed go on a very long time. But it's important to realize that, because of the time value of money, the present value (i.e, the value today) of those payments very far off in the future (say, 50 years from now) is negligible. Thus the present value of an ordinary annuity (i.e., one with a fixed end) of 50 years is not very much less than that of a perpetuity whose payments go on ad infinitum.

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  1. Why do companies issue 100-year bonds?

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    There are two broad categories of annuity: fixed and variable. These categories refer to the manner in which the investment ... Read Full Answer >>
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    Though the appeal of having guaranteed income after retirement is undeniable, there are actually a number of risks to consider ... Read Full Answer >>
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