# Math 325 Ch 4 – Additional Problems i.

```Math 325
1. The PV of a perpetuity paying \$1 at the end of every three years is 125/91. Find i.
2. There is \$40,000 in a fund which is accumulating at 4% per annum convertible continuously. If the
money is withdrawn continuously at the rate of \$2400 per annum, how long will the fund last?
3.A perpetuity immediate has annual payments of 1, 3, 5, 7, … If the PV of the 6th and 7th payments are
equal, find the PV of the perpetuity.
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Math 325
4. A 20-yr annuity with annual payments pays \$600 immediately and each subsequent payment is 5%
greater than the preceding payment. The annual effective interest rate is 10.25%.
a) Find the PV of this annuity.
b) Find the rate of interest i' such that the PV would be equal to the PV of a 20-year level annuity-due
paying \$600 in payments, at an effective interest rate of i'.
5. Paula wishes to accumulate \$60,000 in a fund at the end of 25 years. She plans to deposit \$80 in the
fund at the end of each of the first 120 months. She then deposits \$80+x in the fund at the end of each
of the last 180 months. If i = 3.66%, find x.
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Math 325