(3) A perpetuity will make payments of $50,000 every third year, with the first
ID: 2772074 • Letter: #
Question
(3) A perpetuity will make payments of $50,000 every third year, with the first payment occurring three years from now. The effective annual interest rate is 8%. Find the present value of this perpetuity.
(4) You deposit money into an account each year for 20 years. The first deposit is $1,500, and then each subsequent annual deposit is $500 greater than the previous deposit. The effective annual interest rate is 10%. Find the accumulated value of your account, two years after the last (20th) deposit.
Explanation / Answer
Present value of perpetuity:
= $50,000÷[(1+8%)^3-1]
= $192,521
Please post one question per post.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.