Suppose that today is January 1, 2003. A perpetuity makes annual payments, the first coming...
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Suppose that today is January 1, 2003. A perpetuity makes annual payments, the first coming on January 1, 2011. The first payment is for 6140 dollars, and each payment up to (and including) the one on January 1, 2036 is 4.3 percent larger than the previous payment. After that, the payments increase by 400 dollars annually. What is the present value of the perpetuity today, assuming an effective rate of 8.2 percent?
Answer = dollars.
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