Dottie Has Decided to Set Up an Account That Will

question 127

Short Answer

Dottie has decided to set up an account that will pay her granddaughter $5,000 a year indefinitely.How much should Dottie deposit in an account paying 8 percent annual interest?

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Definitions:

Laspeyres Price Index

A consumer price index used to measure the change over time in the total cost of purchasing a fixed basket of goods and services.

Per Capita Income

The average income earned per person in a particular area or country, calculated by dividing the area's total income by its total population.

Laspeyres Price Index

A price index that measures the change in the price level of a basket of goods and services, using the quantities of the base period as weights.

Base Year

A specific year against which economic growth or other variables are measured and compared.