Your grandparents would like to establish a trust fund that will pay you and your heirs $175,000 per year forever with the first payment one year from today. If the trust fund earns an annual return of 3.4 percent, how much must your grandparents deposit today?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 19P
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Your grandparents would like to establish a trust fund that will pay you
and your heirs $175,000 per year forever with the first payment one year
from today. If the trust fund earns an annual return of 3.4 percent, how
much must your grandparents deposit today?
Transcribed Image Text:Your grandparents would like to establish a trust fund that will pay you and your heirs $175,000 per year forever with the first payment one year from today. If the trust fund earns an annual return of 3.4 percent, how much must your grandparents deposit today?
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