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What is the value of the bequest immediately

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A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and will be $2,000. Each year after that, you will receive a payment on the anniversary of the last payment that is 6% larger than the last payment. This pattern of payments will go on forever. Assume that the interest rate is 10% per year.

Problem a) What is today's value of the bequest?

Problem b) What is the value of the bequest immediately after the first payment is made?

Reference no: EM132828548

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