Annuities and perpetuities
Infinitely many payments, a finite price
A bond pays 1,000 a year. What is it worth today if money can earn 5% a year? A payment in one year is worth 1,000 / 1.05 today, in two years 1,000 / 1.05², and so on: a geometric series with ratio 1/1.05. The sum over N years: 1,000 · (1 − 1.05⁻ᴺ) / 0.05. If the payments go on forever, the sum is 1,000 / 0.05 = 20,000. Fifty years of payments are worth 18,256, that is 91% of "forever": the distant years add almost nothing.
Careful: an infinite sum is finite only when the terms shrink fast enough. At a zero rate every payment is worth 1,000 and "forever" is worth infinitely much. And the sum 1 + 1/2 + 1/3 + 1/4 + … has shrinking terms too, yet it grows without bound: shrinking is not enough, they must shrink geometrically or at least fast enough.