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You currently have $620k in savings. You plan on living off of a growing perpetuity which...

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Finance

You currently have $620k in savings. You plan on living off of agrowing perpetuity which grows at 3% per year (and passing it on toyour kids). You plan on retiring exactly 12 years from today, atwhich point you collect your first cash payment. You will notcontribute any more money to the savings account before retirement,but your current $620k in savings will grow at the discount rateuntil you retire. How much will the first payment of the growingperpetuity be if the appropriate discount rate is 6%?

Answer & Explanation Solved by verified expert
3.7 Ratings (714 Votes)
Our current savings are 620000The appropriate discount rate given is6 The question says that our current savings of620k will grow at the discount rate of 6per annum until we retireWe will retire 12    See Answer
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