answer q 15

Q14 lly A college estimates that its new campus center will require $3000 for upkeep at the end of each wear for the next 5 years and $5000 at the end of each year thereafter, indefinitely. If money is worth 12% effective, how large an endowment is necessary for the future upkeep of the campus center? Ans. $34 457.12 Q15 A perpetuity pays $4000 per year, as follows: in odd-numbered years, a payment of $4600 is made at the end of the year. in even-numbered years, a payment of $1000 is made at the end of each quarter. Interest is at annual effective rate of 8%. At the beginning of an odd-numbered year, this perpetuity is exchanged for another of equal value which provides semiannual payments, the first payment due six months hence. What is the semiannual payment of the new perpetuity? Ans. $1989.36