Jake inherits a perpetuity that will pay him $10,000 at the end of the first year increasing by $10,000 per year until a payment of $150,000 is made at the end of the fifteen year.

Jake inherits a perpetuity that will pay him $10,000 at the end of the first year increasing by

$10,000 per year until a payment of $150,000 is made at the end of the fifteen year. Payments

remain level after the fifteenth year at $150,000 per year. Determine the present value of this

perpetuity, assuming a 7.5% annual interest rate.

Expert Solution

Ans: $2589288.46

jeff jeffy answered 2 years ago

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