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

Question

Business

Lauren Bruce

26 November, 22:52

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

+1

Answers (1)

Know the Answer?

Omar Barrera · Answer 1

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