How much should I deposit in a trust now (time zero) if it has to yield $100,000 at time zero, $25,000 in years 1 through 5, $50,000 per year from year 6 in perpetuity. Interest rate is 5%. Verify your answers using excel. Hint: Perpetuity means your principal stays the same, you are just generating interest which you withdraw. How much money should you have at the end of year 5 so that you generate 50,000 per year interest?

How much should I deposit in a trust now (time zero) if it has to yield $100,000 at time zero, $25,000 in years 1 through 5, $50,000 per year from year 6 in perpetuity. Interest rate is 5%. Verify your answers using excel. Hint: Perpetuity means your principal stays the same, you are just generating interest which you withdraw. How much money should you have at the end of year 5 so that you generate 50,000 per year interest?

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter6: Saving And Investing

Section6.1: Why Save?

Problem 6R

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