Sally purchases a perpetuity immediate with annual payments that pays $4000 toda and Payments increase by 5% per year. She will pay for it with a single payment exactly 6 years from today. Assume a constant force of interest of 7%. Calculate the size of the payment at time

Sally purchases a perpetuity immediate with annual payments that pays $4000 toda and Payments increase by 5% per year. She will pay for it with a single payment exactly 6 years from today. Assume a constant force of interest of 7%. Calculate the size of the payment at time

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Sally purchases a perpetuity immediate with annual payments that pays $4000 today
and Payments increase by 5% per year. She will pay for it with a single payment exactly 6 years
from today. Assume a constant force of interest of 7%. Calculate the size of the payment at time
6.

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