Having achieved immense success since graduating from university, you have set up an endowment fund to which you will contribute $100,000 today, with this amount declining at a constant rate of 2% p.a. in perpetuity. If the interest rate appropriate for valuing this contribution is 10% p.a., its present value is closest to: $816,667. $933,333. $916,667. $1,375,000.

Having achieved immense success since graduating from university, you have set up an endowment fund to which you will contribute $100,000 today, with this amount declining at a constant rate of 2% p.a. in perpetuity. If the interest rate appropriate for valuing this contribution is 10% p.a., its present value is closest to: $816,667. $933,333. $916,667. $1,375,000.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 10RE: If 90,000 is invested in a fund on December 31, 2019, and 5 equal annual withdrawals of 23,138.32...

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