If Money Can Earn 6% Compounded Annually, What Percentage More

question 50

Short Answer

If money can earn 6% compounded annually, what percentage more money is required to fund an ordinary perpetuity paying $1,000 at the end of every year than to fund an ordinary annuity paying $1,000 per year for 25 years?

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Definitions:

Alternative Technologies

Alternative technologies refer to new or substitute technological solutions that differ from existing methods, often offering improvements in efficiency or sustainability.

Capital Intensive

Describes industries or businesses that require large amounts of capital investments like equipment and machinery relative to labor.

Alternative Technologies

Different or new technologies that can be used as substitutes for existing ones, often considered in the context of improving efficiency or reducing environmental impact.

Market Price

The going rate at which a commodity or service is offered for buying or selling in a trading environment.