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The amount of money deposited 25 years ago at 5% interest that would now provide a perpetual payment of $15,000 per year is closest to
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The amount of money deposited 25 years ago at 5% interest that would now provide a perpetual payment of $15,000 per year is closest to

User Twm
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1 Answer

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The amount of money needed now to begin the perpetual payments is
P = A/I =15,000÷0.05=300,000

The amount that would need to have been deposited 25 years ago is
P=A÷(1+r)^t
P=300,000÷(1+0.05)^(25)
P=88,590.83
User Acroscene
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