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(5) On January l, 1988, Felix inherited a perpetuity with annual payments beginning in six months. The first payment was $3,000, and after that the payments increased by 3% each year. Find the value of this perpetuity on January 1, 1995 if the annual effective interest rate was 6% from January I, 1988 through January I, 1996 and 4% thereafter.

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Answer:

Hence the value of this perpetuity on January 1, 1995 will be $55993.18404

Explanation:

(5) On January l, 1988, Felix inherited a perpetuity with annual payments beginning-example-1
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