Monday, August 8, 2011

Perpetuity question math?

My Uncle Samuel pays property taxes of every year and expects to pay $22.50 this time next year. The town of Townsend will let him pay the property taxes into perpetuity in one amount. How much should the town ask my Uncle Samuel to pay them in order to have the property taxes paid into perpetuity. ume that they use an interest rate of 10.8000%, that the growth rate is 5.4500%. Give your answer in dollars and cents. Use eight places of decimals in your calculations and round up on the half cent.

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