Question

A local garden society has raised funds to create a public garden on a donated property in their small town. They would like to set up a fund to finance re-planting every ten years at the cost of $17000 in perpetuity (forever).
If the interest rate is 6% per annum, how much money should be set aside now to pay for the replanting in perpetuity?

Answer 1

Amount required for replantation every 10 years =$ 17,000

Interest rate = 6%

The present worth of the cash flow can be written as

The amount we are required to set aside=$ 21,495.92

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