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A perpetuity-due pays $1 per year, and its present value is $21 at an annual effective interest rate of i. A 10-year annuity-immediate pays X
A perpetuity-due pays $1 per year, and its present value is $21 at an annual effective interest rate of i.
A 10-year annuity-immediate pays X in one year, 1 in two years, 2 in three years, and so on until a final payment of 9. The annuity immediate has a present value of $68.73 at the same value of i as for the perpetuity.
The amount of the 8th payment of the annuity-immediate is Y. Find Y.
(a) 6 (b) 7 (c) 13 (d) 20 (e) 27
Show work please, no excel. I've already used the perpetuity to find i=0.05
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