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Jack inherited a perpetuity - due, with annual payments of 1 0 , 0 0 0 . He immediately exchanged the first 1 0 payments

Jack inherited a perpetuity

-

due, with annual payments of

10, 000 .

He immediately exchanged

the first

10

payments of the perpetuity for a perpetuity

-

immediate having the same present

value. The perpetuity

-

immediate has annual payments of

x

starting at the end of the

11

year.

All the present values are based on an annual effective interest rate of

5.5 % .

Calculate

x .

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