Determine the amount of money required to set up a charitable endowment that pays the amount P each year indefinitely for the annual interest rate r compounded continuously. P = $13,000, r = 6% STEP 1: We start with the present value of a perpetuity, which is defined as follows. Present value = Here, ? v represents the size of each annual payment in dollars, and ? v represents the annual interest rate. STEP 2: Calculate the present value. (Round your answer to two decimal places.)
Determine the amount of money required to set up a charitable endowment that pays the amount P each year indefinitely for the annual interest rate r compounded continuously. P = $13,000, r = 6% STEP 1: We start with the present value of a perpetuity, which is defined as follows. Present value = Here, ? v represents the size of each annual payment in dollars, and ? v represents the annual interest rate. STEP 2: Calculate the present value. (Round your answer to two decimal places.)
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications
Section: Chapter Questions
Problem 23E
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Determine the amount of money required to set up a charitable endowment that pays the amount P each year indefinitely for the annual interest rate r compounded continuously.
P = $13,000, r = 6%
STEP 1: We start with the present value of a perpetuity, which is defined as follows.
Present value =
P |
r |
Here, represents the size of each annual payment in dollars, and represents the annual interest rate.
STEP 2: Calculate the present value. (Round your answer to two decimal places.)
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