A community for students.

Here's the question you clicked on:

55 members online
  • 0 replying
  • 0 viewing


  • 5 years ago

A perpetuity is similar to a decreasing annuity, except that the payments continue forever. A grateful alumnus decides to donate a permanent scholarship of $1440 per year. How much money should be deposited in the bank at 8% interest compounded annually in order to be able to supply the money for the scholarship at the end of each year?

  • This Question is Closed
  1. anonymous
    • 5 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    Since it is compounded each year, and 1440 is then taken out, only 1440 needs to be the interest. We are assuming the minumum, so $1440 tops. This means that the relationship is: \[8/100 = 1440/x\] so \[x=1440/(8/100) = 1440(100)/8 = 144000/8 = 18000\] thus he needs to deposit 18000.

  2. Not the answer you are looking for?
    Search for more explanations.

    • Attachments:

Ask your own question

Sign Up
Find more explanations on OpenStudy
Privacy Policy

Your question is ready. Sign up for free to start getting answers.

spraguer (Moderator)
5 → View Detailed Profile

is replying to Can someone tell me what button the professor is hitting...


  • Teamwork 19 Teammate
  • Problem Solving 19 Hero
  • You have blocked this person.
  • ✔ You're a fan Checking fan status...

Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.

This is the testimonial you wrote.
You haven't written a testimonial for Owlfred.