Calculate future value or present value or annuity

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a)Happy Harry has just bought a scratch lottery ticket and won €10,000. He wants to finance the future study of his newly born daughter and invests this money in a fund with a maturity of 18 years offering a promising yearly return of 6%. What is the amount available on the 18th birthday of his daughter?

(1) Calculate future value or present value or annuity ?

(2) Future value = PV * (1+ i)n

b)Centuries ago, rich families in the province of Friesland established a fund to further welfare and education. From this fund, only the interest revenue was allowed to be spent, in order to keep the principal unattached. Assume the fund has amounted to €12 million and market interest rate (i) is 6% annually. What would be the perpetuity (or present value of the fund) endowed to the society?

(1) Calculate future value or present value or annuity ?

(2) Present value = i A

Reference no: EM133000222

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