Answer:
My grandparents deposit $5200000 today.
Explanation:
The annual return earned by trust fund = $2.5 percent
It is given that the trust will pay annually a certain amount for infinite period so annual pay = $130000 per year.
Now we have to calculate the invested or deposited amount by grandparents today.
The present value of future constant annual payment over infinite period = (P/A, i%, n = infinity) or 1 / i%
The amount that should be deposited today :
[tex]= 130000 \times \frac{1}{2.5 \ percent} \\= 5200000[/tex]
