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Unformatted text preview: of this perpetuity. 25. (S09T1) Tyler has inherited $1 million. He has decided to use his inheritance to purchase one of the following: a. A 30 year annuity immediate with annual payments of 106,079.25; or b. A perpetuity due with quarterly payments of P. Both options are based on the same interest rate. Calculate P. 26. (S11HW) The value of a perpetuity immediate where the payment is P is 1000 less than the value of a perpetuity due where the payment if P. Calculate P. 27. (S12HW) A perpetuity is funded by a donation of 500,000. Payments of P are to be made at the end of every second year. In other words, P will be paid at time 2, 4, 6, etc. If the fund earns an annual effective interest rate of 8%, calculate P. Answers: 21. 1,5000,000 22. 306,461.05 23. 21,00024. 12.8178% 25. 23,545.91 26. 100027. 83,200...
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This note was uploaded on 02/05/2012 for the course MA 373 taught by Professor Staff during the Spring '08 term at Purdue University-West Lafayette.
- Spring '08