What amount can be paid at the end of every month in perpetuity from an endowment of $350,000 which is earning 5.4% compounded monthly?

Question

Quizplus · Accepted Answer

The amount that can be paid in perpetuity is calculated using the formula for perpetuity: Payment = Principal × (Interest Rate / Number of Periods). Here, the principal is $350,000, the annual interest rate is 5.4% (or 0.054 when expressed as a decimal), and since the interest is compounded monthly, the number of periods is 12. Thus, the monthly payment is $350,000 × (0.054 / 12) = $1,575.

What Amount Can Be Paid at the End of Every