What is the present value of perpetuity

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Reference no: EM131821804

Funding your retirement You plan to retire in exactly 20 years. You goal is to create a fund that will allow you to receive $20,000 at the end of each year for the 30 years between retirement and death (a psychic told you would die exactly 30 years after you retire). You know that you will be able to earn 11% per year during the 30-year retirement period. How much will you need today as a single amount to provide the fund calculated in part (a) if you earn only 9% per year during the 20 years preceding retirement?

2) What is the present value of perpetuity with an $80 payment starting in 4 years, discounted back to the present at 10 percent?

3) Sam Mart, M.D., is establishing a fund to pay off a $200,000 lump-sum loan when it matures in 10 years. The funds will earn 8 percent interest per year. What is the size of the yearly payment in each case below?

a. The payment is made at the end of the year.

b. The payment is made at the beginning of the year.

Reference no: EM131821804

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