Charlotte will receive quarterly payments from a perpetuity, beginning now. The amount of the first payment...

Charlotte will receive quarterly payments from a perpetuity, beginning now. The amount of the first payment is 100, and each subsequent payment is larger than the previous payment by an amount X. Assuming an interest of 6% convertible monthly, the present value of this perpetuity is $20,000. Find X.

Solutions

Expert Solution

Answer;

Value of X = 1.03676%

Cross check

Present value of investment = 100 + 1.03676 / 1.541945 - 1.03676

Present value of investment = 101.03676 / .505185%

Present value of investment = $20000

jeff jeffy answered 1 year ago

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