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Martin wants to provide money in his will for an annual bequest to whichever of his living relatives is oldest. That bequest will provide $ 9 comma 000 in the first​ year, and will grow by 7 ​% per​ year, forever. If the interest rate is 10 ​%, how much must Martin provide to fund this​ bequest?

User Skydv
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1 Answer

1 vote

Answer:

$300,00

Step-by-step explanation:

In a situation where the interest rate is said to be 10% the amount that Martin must provide in order to fund this​ bequest will therefore be:

Bequest first year $9,000/(Interest rate 10%-

Increase of 7 ​% per​ year)

Hence:

$9,000/0.03

=$300,000

Therefore $300,00 will be provided to fund the bequest

User Jeff Vdovjak
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