Group 1 set up a trust fund to support Group 2's expenses in the year 2014. Group one collected $200,000 each year starting from 2014 to 2020. Group 1 expects to receive an equal amount of money each year to support Group 2's expenses starting from 2022 and it will last forever. If the trust fund earns an interest rate of 14% per year, what will the amount Group 1 receives each year forever be?

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
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Group 1 set up a trust fund to support Group 2's
expenses in the year 2014. Group one collected
$200,000 each year starting from 2014 to 2020.
Group 1 expects to receive an equal amount of
money each year to support Group 2's expenses
starting from 2022 and it will last forever. If the trust
fund earns an interest rate of 14% per year, what
will the amount Group 1 receives each year forever
be?
Transcribed Image Text:Group 1 set up a trust fund to support Group 2's expenses in the year 2014. Group one collected $200,000 each year starting from 2014 to 2020. Group 1 expects to receive an equal amount of money each year to support Group 2's expenses starting from 2022 and it will last forever. If the trust fund earns an interest rate of 14% per year, what will the amount Group 1 receives each year forever be?
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