Refer back to Sections 2.2–2.4. If the rate of interest is 8% rather than 10%, how much would you need to set aside to provide each of the following?

a. $1 billion at the end of each year in perpetuity.

b. A perpetuity that pays $1 billion at the end of the first year and that grows at 4% a year.

c. $1 billion at the end of each year for 20 years.

d. $1 billion a year spread evenly over 20 years.

Visit us at www.mhhe.com/bma Visit us at www.mhhe.com/bma 42 Part One Value AppendixLO1