Perpetual annuity Imagine that today you deposit $B in a savings account that earns interest at a rate of p% per year compounded continuously (see Section 6.8). The goal is to draw an income of $I per year from the account forever. The amount of money that must be deposited is , where r =p/100. Suppose you find an account that earns 12% interest annually and you wish to have an income from the account of $5000 per year. How much must you deposit today?

SOLUTION Imagine that today you deposit $B in a savings account that earns interest at a rate of p% per year compounded continuously. The goal is to draw an income of $I per year from the account Step 1Given thatGiven Where