Question
Charities A, B and C split level payments of X at the end of each year forever. For the rst n years, two-thirds of the
Charities A, B and C split level payments of X at the end of each year forever. For the rst n years, two-thirds of the payment will be given to Charity A and the other one-third of the payment to Charity B. Thereafter, all payments will be directed to Charity C. If the annual eective interest rate for the perpetuity is 10%, then the proportion of the present value going to Charity C is 0.3855432894. If the present value of the inheritance is based on an annual eective interest rate of 8%, then what is the proportion of the present value going to Charity B? (a) 0.05-0.055 (b) 0.10-0.105 (c) 0.15-0.155 (d) 0.175-0.180 (e) 0.190-0.195
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