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your grandparents would like to establish a trust fund that will pay you and your heirs...

your grandparents would like to establish a trust fund that will pay you and your heirs 145000 per year forever with the first payment one year from today. if the trust fund earns an annual return of 2.8 percent how much must your grandparents deposit today
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Answer #1

This amount is a perpetuity.

The amount to be deposited can be known using the formula:

Annual cash flows/ appropriate discount rate

=>145,000/ 2.8%

=>5,178,571.43.

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