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Ralph buys a perpetuity immediate paying 60 annually. He deposits the payments into a savings account earning interest at an annual effective rate of 4%.
Ralph buys a perpetuity immediate paying 60 annually. He deposits the payments into a savings account earning interest at an annual effective rate of 4%. Fifteen years later, after receiving the 15th payment, Ralph sells the perpetuity based on an effective annual interest rate of 4%. Using the proceeds from the sale plus the money in the savings account, Ralph purchases an annuity-due paying X per year for 8 years at an effective annual rate of 4%. CALCULATE X.
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