Question

he local botanical society wants to ensure that the gardens in the town park are properly cared for. The group recently spent $100,000 to plant the gardens. The members want to set up a perpetual fund to provide $100,000 for future replantings every 10 years. a) If interest is 5%, how much money is needed for the fund?b) If the last replanting is in year 100, how much

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

The members want to set up a perpetual fund to provide $100,000 for future replantings every 10 years. The interest rate is 5%.

I will assume that the money is deposited as a lump sum:

FV= PV* (1 + i)^n

PV= FV/ (1+i)^10

PV= 100,000 / 1.05^10= $61,391.33

Now, if n is 100 years:

PV= 100,000/ 1.05^100= $760.45