Perpetuity Problem: endowment providing travel grants every 6 months

[jess5085]

Hi,

I was just wondering if anyone could double check if I'm doing this Q right? Thanks!

 

[tkhunny]

$50,000 * 0.06 = $3,000.00 -- That's annual interest. Why would semi-annual be the same? Compounding won't make THAT much difference.

$50,000 * (0.06/2) = $1,500.0
Use m = 1 and n = 2

$50,000 * (1 + 0.06/4)^2 - $50,000 = $1,511.25
Use m = 2 and n = 4