If an annuity makes an infinite series of equal payments at the end of the interest periods, it is called a perpetuity. If a lump sum investment of An is needed to result in n periodic payments of R when the interest rate per period is i, then An = R[(1-(1+i)^-n)/(i)] (a) Evaluate lim n→∞ An to find a formula for the lump sum payment for a perpetuity.     (b) Find the lump sum investment needed to make payments of $180 per month in perpetuity if interest is 6%, compounded monthly. (Round your answer to the nearest cent.)$

Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter10: Sequences, Series, And Probability
Section10.3: Geometric Sequences
Problem 81E
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If an annuity makes an infinite series of equal payments at the end of the interest periods, it is called a perpetuity. If a lump sum investment of An is needed to result in n periodic payments of R when the interest rate per period is i, then

An = R[(1-(1+i)^-n)/(i)]

(a) Evaluate
lim n→∞ An
to find a formula for the lump sum payment for a perpetuity.
 
 


(b) Find the lump sum investment needed to make payments of $180 per month in perpetuity if interest is 6%, compounded monthly. (Round your answer to the nearest cent.)
$
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