A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and will be $5,000. Each
Posted: Wed Mar 09, 2022 8:47 am
A rich relative has bequeathed you a growing perpetuity. The
first payment will occur in a year and will be $5,000. Each year
after that, you will receive a payment on the anniversary of the
last payment that is 7% larger than the last payment. This pattern
of payments will go on forever. Assume that the interest rate is
12% per year.
1- What is todays value of the bequest?
2- What is the value of the bequest immediately after the first
payment is made?
first payment will occur in a year and will be $5,000. Each year
after that, you will receive a payment on the anniversary of the
last payment that is 7% larger than the last payment. This pattern
of payments will go on forever. Assume that the interest rate is
12% per year.
1- What is todays value of the bequest?
2- What is the value of the bequest immediately after the first
payment is made?