(5) On January l, 1988, Felix inherited a perpetuity with annual payments beginning in six months. The first payment was $3,000,
and after that the payments increased by 3% each year. Find the value of this perpetuity on January 1, 1995 if the annual effective interest rate was 6% from January I, 1988 through January I, 1996 and 4% thereafter.
1 answer:
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Table is attached below
From the table we can see that the Lemon cost is equal to 35% of the expenses
Let the expense be x, Lemons cost is 70
Lemon cost = 35% * x
70 = 35% * x ( 35% = = 0.35)
70 = 0.35 * x
x =
x= 200, Expense = $200
Given : Profit percentage is 15%= = 0.15
Profit = profit percentage * Expense
Profit = 0.15 * 200 = 30
So profit = $30
