A trust fund pays one year from today and each subsequent annual payment is smaller…

MATHEMATICS · Single correct · A Level · Mathematics · Sequences and series · Sequences and series

Problem

A trust fund pays 200,000200{,}000 one year from today and each subsequent annual payment is 3%3\% smaller than the one before. If money earns 5%5\% interest compounded annually, what is the present value today of the entire stream of payments (to the nearest dollar)? (a) 2,625,0002{,}625{,}000 (b) 4,000,0004{,}000{,}000 (c) 2,500,0002{,}500{,}000 (d) 2,380,9522{,}380{,}952

Related theory

Browse the problem library