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Suppose Bob is 55 and wishes to retire by 65. He purchases a perpetuity-immediate that makes monthly payments of 3000 with the first payment coming
Suppose Bob is 55 and wishes to retire by 65. He purchases a perpetuity-immediate that makes monthly payments of 3000 with the first payment coming the end of the first month following his 65th birthday. To buy this perpetuity, Bob will make 10 annual payments starting at his 50th birthday. If each payment increases by 5% after the first payment, and if the annual effective interest rate is 5%, what is the amount of the 10th payment.
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