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A rich relative has died and left you a growing perpetuity

Finance

A rich relative has died and left you a growing perpetuity. The first payment will occur in a year and will be EUR 2500. Each year after that, you will receive a payment on the anniversary of the last payment that is 2% larger than the last payment. This pattern of payments will go on forever. Assume that the interest rate is 11% per year. 1. What is today's value of the bequest? 2. What is the value of the bequest immediately after the first payment is made?

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