Question

Ally wishes to leave a provision in her will that $11,748 will be paid annually in perpetuity to a local charity. How much must she provide in her will for this perpetuity if the interest rate is 4%

Answer 1

$293,700

Step-by-step explanation:

The computation of the amount provided is shown below:

= Annual target ÷ Rate of Interest

= $11,748 ÷ 0.04

= $293,700

By dividing the annual target from the rate of interest we can determine the investment that should be provided for this given perpetuity