Question
Ally wishes to leave a provision in her will that $4,000 be paid yearly to a local charity forever, starting 1 year after her death.
Ally wishes to leave a provision in her will that $4,000 be paid yearly to a local charity forever, starting 1 year after her death. How much (in $) must she provide in her will for this perpetuity if interest rate is 9%? (Round your answer to the nearest cent.)
$
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
A perpetuity will pay $1,000 per year, starting seven years after the perpetuity is purchased. What is the present value (in $) of this perpetuity on the date that it is purchased, given that the interest rate is 4%? (Round your answer to the nearest cent.)
$
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
You want to endow a scholarship today that pays $15,000 per year forever, starting one year from now. What amount (in $) must you donate today to endow the scholarship if the discount rate is 7%? (Round your answer to the nearest cent.)
$
How would your answer (in $) change in if you endow the scholarship now, but it makes the first award to a student 10 years from today? (Round your answer to the nearest cent.)
$
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Clarissa wants to fund a growing perpetuity that will pay money to a local museum each year, starting next year. She wants to pay the museum $2,000 next year and wants the annual amount to grow by 5% per year. Given that the interest rate is 8%, how much (in $) does she need to fund this perpetuity? (Round your answer to the nearest cent.)
$
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started