Question

You are going to deposit $800 into an account at the beginning of each year for...

You are going to deposit $800 into an account at the beginning of each year for the next 20 years (First payment is today). Starting in year 21, you will begin receiving perpetuity from the account. First payment from the perpetuity will be at the beginning of year 21. If the account pays 14% (EAR), how much will you receive in each year from this perpetuity?

answer is 10194.79

can someone show me how to do this on financial calculator with steps , thank you

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Homework Answers

Answer #1
Take BAII plus and do as shown below
Step 1 Press 2ND
Step 2 Press PMT
Step 3 Press 2ND
Step 4 Press ENTER
Step 5 Press 2ND
Step 6 Press CPT
Step 7 Enter 0
Step 8 Press PV
Step 9 Enter 14
Step 10 Press I/Y
Step 11 Enter -800
Step 12 Press PMT
Step 13 Enter 20
Step 14 Press N
Step 15 Press CPT
Step 16 Press FV
Future value in year 20 $83,014.73

(Perpetual payment/Rate)+Perpetual payment = $83,014.73

(Perpetual payment/14%)+Perpetual payment = $83,014.73

Perpetual payment+14%*Perpetual payment = $83,014.73*14%

Perpetual payment = $10,194.79

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