A rather wealthy man decides to arrange for his descendants to be well educated. He wants each child to have $65,000 for his or her education. He plans to set up a perpetual trust fund so that five children will receive this assistance in each generation. He estimates that generations will be spaced 25 years apart. He expects the trust to be able to obtain a 5% rate of return and the first recipients to receive the money 15 years hence. How much money should he now set aside in the trust?
A rather wealthy man decides to arrange for his descendants to be well educated. He wants each child to have $65,000 for his or her education. He plans to set up a perpetual trust fund so that five children will receive this assistance in each generation. He estimates that generations will be spaced 25 years apart. He expects the trust to be able to obtain a 5% rate of return and the first recipients to receive the money 15 years hence. How much money should he now set aside in the trust?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A rather wealthy man decides to arrange for his descendants to be well educated. He wants each child to have $65,000 for his or her education. He plans to set up a perpetual trust fund so that five children will receive this assistance in each generation. He estimates that generations will be spaced 25 years apart. He expects the trust to be able to obtain a 5%
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