Thread: perpetuity- rate of interest

Perpetuity X has level payments of $300 at the end of each year. Perpetuity Y also has end of year payments but they begin at $45 and increase by $45 each year. Find the rate of interest which will make the difference in present values between these two perpetuities a maximum. [Hint: Calculus
needed].

i do not understand how to do this.. where do i start?

Originally Posted by mathlovet

Perpetuity Y also has end of year payments but they begin at $45 and increase by $45 each year.

Check this and this out and let's see if you get any ideas.