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2 September, 09:53

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

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  1. 2 September, 11:05
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    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
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