Question

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A couple of generations ago, a relative of Sophia wanted to share his wealth with family members and decided to open a special bank account. The purpose of such financial instrument was to pay out an annuity forever, which would be shared among all family members. Given that the initial deposit was 480,470 dollars and the prevailing interest rate at that time was 5%, compounded annually, find the value of the annuity this family collects every year. (note: round your answer to the nearest cent, and do not include spaces, currency signs, plus or minus signs, or commas)

Answer 1

Deposit = $480, 470 Perpetuity (P) = Present Value Perpetuity annuity Deposit & Interest rate Valuu $480, 470. X 0.05 1 - 1$24,023.5 is the answer