Aunt Clarisse Has Promised to Leave You an Annuity That

Multiple Choice

Aunt Clarisse has promised to leave you an annuity that will pay $60 next year and grow at an annual rate of 4%. The payments are expected to go on indefinitely and the interest rate is 9%. What is the value of the growing perpetuity?

A) $667
B) $693
C) $1,200
D) $1,248