Question

.math.com/Studesta c ada s cute c tive 373 192 alwaleed roghaib | 03/26/20 10:59 A Submit Quiz Me: Quiz Me: 4.2 Perpetuities This Question: 1 This Quir: 2 pts poss

you have 200,000 to donate, discount rate os 5% , first payment is made 10 years from today how large is the annual payment be

Answer 1

We are donating 200,000 today, thus Present Value is 200,000

Discount rate is 5%

Time is 10 years i.e 10

We have to compute Future Value

Future Value = Present Value * (1 + Discount rate) ^ Time

                        = 200,000 * (1+0.05)^10

                        = 200,00 * 1.63

= 326000

The annual payment in 10 years will be $326000