Question

Martin wants to provide money in his will for an annual bequest to whichever of his living relatives is oldest. That bequest will provide $ 4 comma 000$4,000 in the first​ year, and will grow by 66​% per​ year, forever. If the interest rate is 1111​%, how much must Martin provide to fund this​ bequest?

Answer 1

Step-by-step explanation:

Amount = CF/k - g

where CF = $4000; k = 1111%=11.11; g = 66% = 0.66

= 4000/(11.11 - 0.66) = $41,800

This is the amount that must be provided to fund the bequest