Exercise 4

1. How much would be needed to invest today in order to be able to withdraw it at the end of the first year, indefinitely, from the annual benefits indexed to 8%. Note that the first benefit you want to withdraw is $15,000 and the annual effective rate is 9%.

2. Find the current value of a $1,000 perpetuity payable at the beginning of each quarter if the quarterly capitalized nominal rate is 10%?

3. We offer you an investment of 10% per year. If you invest $16,000, how long will it take to get $35,000?