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Please do not copy other solutions. The question say immediately AFTER and not before Bao buys a perpetuity-due paying 500 annually. She deposits the payments
Please do not copy other solutions. The question say immediately AFTER and not before
Bao buys a perpetuity-due paying 500 annually. She deposits the payments into a savings account earning interest at an annual effective rate of 10%. Ten years later, immediately after receiving the eleventh payment, Bao sells the remaining payments of the perpetuity based on an annual effective interest rate of 10%. Using the proceeds from the sale plus the money in the savings account, Bao purchases an annuitydue paying X per year for 20 years at an effective annual interest rate of 10%. Calculate X. (a) 1145 (b) 1260 (c) 1385 (d) 1523 (e) 1675
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