We, at a well-known Charity, received a bequest from a Philanthropist for a total of $10,000,000.00. He set up a Trust Fund managed by a Trustee, with the following provisions stipulated:
1) That, we "The Charity", are to receive annual annuity payments for 25 years.
2) That these payments will continue for another 25 years, but the payments will double from the previous 25 years due to the inflation rate.
3) That these payments will continue for another 25 years, but the payments will double again, or quadruple the initial payments, due again to anticipated inflation rate.
4) The Trustee assures us that the Trust Fund will earn a guaranteed interest rate of 8% compounded monthly for the 75-year life span of the Trust Fund.
5) Can you folks figure out how much do we expect to receive from these annual payments for 25, 50 and 75 years respectively? This is for our budgetary planning. Any help would be immensely appreciated. It would save us a lot of resources, without having us consult professional Investment Advisors.
Thank you very much for any help.
1) Your Charity should receive a total amount of $713,518.29 each and every year for the first 25 years.
2) It naturally follows that your payments for the following 25 years =$713,518.29 x 2=$1,427,036.58 each and every year.
3) And for the last 25 years, your Charity should receive=$713,518.29 x 4=$2,854,073.16 each and every year.
4) I have verified these calculations on my computer software, and they are accurate to the cent.
If you have any questions, just let us know on this Forum, and will be glad to answer them.
