Ally wishes to leave a provision in her will that $2 000 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 6%?
A)$3 201.21
B)$42 000.00
C)$21 200.00
D)$33 333.33

Question

Quizplus · Accepted Answer

The amount needed for a perpetuity can be calculated using the formula: Perpetuity = Payment / Interest Rate. Here, Payment = $2,000, Interest Rate = 6% or 0.06. Thus, Perpetuity = $2,000 / 0.06 = $33,333.33.

Ally Wishes to Leave a Provision in Her Will That