SOLUTION: Hi, I was having trouble with this particular finance question and was just wondering if I had solved it correctly. Ally wishes to leave a provision in her will that $7000 wi

Question 1019737: Hi,
I was having trouble with this particular finance question and was just wondering if I had solved it correctly.
Ally wishes to leave a provision in her will that $7000 will be paid annually in perpetuity to a local charity. How much must she provide in her will for this perpetuity if the interest rate is 6%?
PV= C/r
PV = $7000/.06
PV= $116,666.67
Did I do it correctly?

Thanks.

Answer by Alan3354(69443) (Show Source): You can put this solution on YOUR website!
Ally wishes to leave a provision in her will that $7000 will be paid annually in perpetuity to a local charity. How much must she provide in her will for this perpetuity if the interest rate is 6%?
PV= C/r
PV = $7000/.06
PV= $116,666.67
==================
If it's simple interest, you're correct.
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