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Grandpa Joe decides to purchase a trust fund for his grandson Danny. The fund will start making payments 6 months from now, and will make semiannual payments forever. Grandpa Joe would like the payments to be of the form X,2X,X,2X,X,2X,…, but it would cost him 11300 dollars for such a fund. Since he doesn't want to spend that much money, he instead decides to purchase a trust fund where the first 30 payments will be for 45 dollars each, and then the remaining payments will be of the form X,2X,X,2X,X,2X,…. If the interest rate is 6.4 percent convertible semiannually, what is the price that Grandpa Joe pays for this trust fund?

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Financial Management, Finance

Category:- Financial Management
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