Compute the future annual payments


Question: A wealthy industrialist wishes to establish a $2,000,000 trust fund which will provide income for his grandchild into perpetuity. He stipulates in the trust agreement that the principal may not be distributed. The grandchild may only receive the interest earned. If the interest rate earned on the trust is expected to be at least seven percent in all future periods, how much income will the grandchild receive every year?

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Finance Basics: Compute the future annual payments
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