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Betty received 500,000 dollars from a life insurance policy to be distributed to her as an annuity in 10 annual level payments with the first
Betty received 500,000 dollars from a life insurance policy to be distributed to her as an annuity in 10 annual level payments with the first payment made immediately.
Right after she receives her third payment, she is offered a perpetuity paying X dollars every month in lieu of the future annual payments. The first payment will be made in exactly one month.
Determine the value of X assuming an annual effective interest rate of 3%.
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