Maddin

Basically what we have are two identical perpetuity’s with different start dates.  Lets say the payment is $5.  Then the payment stream looks like this:
T=0 $0 (assuming regular, not due)
T=1 +$5
T=2 +$5
T=3 +$5
T=4 +$5
T=5 +$5, -$5
T=6 +$5, -$5
…
Because we recieve the one perp starting today, and don’t start paying the second until t=5, we end up with fixed payments coming in up to T=4, or in other words is a regular annuity with four years to maturity and payments of $5, or the difference of the two perpetuities w/same payments and different start dates.