What amount can be paid at the end of every month, in perpetuity, from an endowment...
What amount can be paid at the end of every month, in perpetuity, from an endowment of $75,000 earning 8% compounded monthly?
The Willie P. Stanton Trust Fund is to pay, $5,000 at the end of every year to the student-athlete voted most deserving based on his or her dedication to the ideals of good citizenship. The Trust Fund earns 7.4% compounded semiannually. What is the present value of this perpetuity?
Homework Answers
1. monthly payment = Present value * interest rate
= 75000*(8%/12) = $500
2. Present value = payment / interest rate = 5000/(7.4%/2) = $135135
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