Question: what are the excel formulas used to find a & b ? A rich relative has bequeathed you a growing perpetuity. The first payment will

what are the excel formulas used to find a & b ?

A rich relative has bequeathed you a growing perpetuity. The first payment will occur one year from now and will be $1,000. Each year after that, you will receive a payment on the anniversary of the previous payment that is 8% larger than the previous payment. This pattern of payments will go on forever. Assume that the interest rate is 12% per year. F a. What is today's value of the bequest? b. What is the value of the bequest immediately after the first payment is made? $ e 0 Annual payment Growth rate Interest rate 1,000 8% 12% 11 12 a. What is today's value of the bequest? 13 14 Value of bequest 25,000.00 15 16 b. What is the value of the bequest immediately after the first payment is made? 17 18 19 Value of bequest 27,000.00 20 22 21 Requirements 1 In cell D14, by using cell references, calculate the value of a bequest today (1 pt.). 2 In cell D18, by using cell references calculate the value of the bequest immediately after the first payment is made (1 pt.). 23 24 25

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