00:01
Okay, so question is we need to draw a timeline to show a perpetual annuity or amount.
00:07
Okay, second, we need to find the sum to infinity of that perpetual annuity that we are getting.
00:13
Third, we need to find how much money to invest a 10 % interest rate to get a annuity of $5 ,000.
00:23
And this is compounded annually.
00:26
So this is compounded annually.
00:29
Okay, next is how much money to invest at 8 % compounded quarterly to get 3 ,000.
00:37
So let's start with first one.
00:40
So let's draw our axis to represent the period.
00:43
So let's say this is zero period.
00:46
1, 2, 3, 4 and it keeps on going till infinity, right? since it's a perpetual.
00:55
So at 0, we are not doing anything.
00:59
So at first or present value will be r over 1 plus i, right? so this is the amount we must get after a year.
01:10
Now if we have paid our amount, correct? for second year, we'll have, and we are talking for first installment only.
01:22
Okay, so in first installment, r over 1 plus i, for second installment, it will be r over 1 plus i squared...