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If you have $100,000 today invested at 9% annual interest, how long will you be able to receive a yearly annuity of $7,500 ? Show all work.

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Answer: In perpetuity

Step-by-step explanation:

Annual interest earned is $100,000*.09= $9,000

End of year 1 total is: 100,000+9,000-7,500 or 101,500

The account is growing due to the fact that annual annuity is less than the interest earned by the principal. The annuity will be able to paid out in perpetuity and the principal balance will continue to grow.

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