Perpetuity-due providing geometric series

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Reference no: EM131882028

1. An insurance company purchases a perpetuity-due providing a geometric series of quarterly payments for a price of 100,000 based on an annual effective interest rate of i. The first and second quarterly payments are 1000 and 1030, respectively

2. Jack inherited a perpetuity immediate with annual payments of 20,000. He immediately exchanged the perpetuity for a 30-year annuity-due with the first payment of 10,000 and an increment of X per year. Based on an annual effective interest rate of 8%, Find X.

Reference no: EM131882028

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