1)

What is a limitation for the formula for the present value of a growing perpetuity, PV = C/(r-g)?

A) There no Limitations

b) g > r

c) g only takes into account the growth in revenue

D) r > g

2) In your will, you bequeath $6000000 into an account that earns 11% annually. The account will fund an annual award in perpetuity that will be given to a world leader who has excellent intentions to promote peace. If you want the award amount to increase by 6% every year, what will be the first year's award amount be?

3) You start saving $1000 at the end of this year and increase your saving by 7% every year for 19 years. Your account earns 9%. How much will you have in your account in 19 years?