What is the value of the growing perpetuity

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Reference no: EM131821501

Uncle Bob passed away but in his will he had promised to leave you an annuity that will pay $ 10 00 next year and the annuity will grow at an annual rate of 8 %. The payments are expected to go on indefinitely and the interest rate is 12%. What is the value of the growing perpetuity?

a. $ 4 , 167 .00 b. $ 6 , 250 .00 c. $ 1 5,000 .00 d. $ 1 2,500 .00 e. $8,333.33

2. Miley expects to receive the following payments: Year 1 = $60,000; Year 2 = $35,000; Year 3 = $12,000. All of this money will be saved for her retirement. If she can earn an average of 10.5 percent on her investments, how much will she have in her account 25 years after making her first deposit?

A. $972,373

B. $989,457

C. $1,006,311

D. $1,147,509

E. $1,231,776

Reference no: EM131821501

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