Question 6 In class we derived the perpetuity formula for cash ow streams starting in year 1. Now suppose you receive payment C every year forever starting today (Le. the perpetuity starts this year instead of next year). Derive the perpetuity formula for this cash ow stream. Question 7 Your cousin is currently 13 years old. She will be going to college in 5 years. Your aunt and uncle would like to have $9 5,000 in a savings account to fund her education at that time. If the account promises to pay a xed interest rate of 3.7% per year, how much money do they need to put into the account today to ensure that they will have $95,000 in 5 years Question 7 Your cousin is currently 13 years old. She will be going to college in 5 years. Your aunt and uncle would like to have $9 5,000 in a savings account to fund her education at that time. If the account promises to pay a xed interest rate of 3.7% per year, how much money do they need to put into the account today to ensure that they will have $95,000 in 5 years Question 8 When Alfred Nobel died, he left the majority of his estate to fund five prizes, each to be awarded annually in perpetuity starting one year after he died. (a) If he wanted the cash award of each of the five prizes to be $48,000 and his estate could earn 11% per year, how much would he need to fund his prizes? (b) If he wanted the value of each prize to grow by 55% per year (perhaps to keep up with ination), how much would he need to leave? Assume that the rst amount was still $48,000. (c) His heirs were surprised by his will and fought it. if they had been able to keep the amount of money you calculated in (b), and had invested it at 11% per year, how much would they have in 2014, 118 years after his death