RatedrillPerpetuity that starts later
A time value of money problem from Ratedrill. Solve it with one answer box, with fresh numbers on every attempt and the formula, calculator keystrokes and Excel version in the worked answer, and it is checked the moment you submit.
The task
A scholarship fund will pay $6,000 a year forever, with the first payment 12 years from today and nothing before then. At 3.25% per year, what is the fund worth today?
What this problem teaches
The perpetuity formula assumes the first payment comes one period after the valuation date. That is why the discounting runs k - 1 years, not k.
A hint if you get stuck
C / r values a perpetuity one period before its first payment. Then discount that lump sum back to today.
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