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Harry has been offered a court settlement in an auto accident case where he will receive $A each year starting from year B . He
Harry has been offered a court settlement in an auto accident case where he will receive $A each year starting from year He will
receive this amount for a total of years. Assume that he will receive the amount at the end of each of the years. He wants to use this
money for a good cause so he decides to use all the settlement money to establish a scholarship fund at his university where the first
scholarship payment would be made a year after he receives the last settlement payment. He wants the payments to continue even after
his death so the payments will go on forever. The stated interest rate is compounded annually.
a What is the present value of his court settlement?
b What is the future value of his court settlement at the time of the last settlement payment?
c What is the annual scholarship payment he can make every year?
Give your answer correct to the nearest whole number.
A
B
C
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