You want to endow a scholarship that will pay $5,000 per year forever, starting one year...

Question

Question

You want to endow a scholarship that will pay $5,000 per year forever, starting one year from now. If the schools endowment

business finance

Answer 1

Answer #1

The amount is computed as shown below:

= Amount of payment each year / discount rate

= $ 5,000 / 10%

= $ 50,000

The amount is computed as shown below:

= 1 / (1 + discount rate )⁹ x ( $ 5000 / 10%)

= 1 / 1.10⁹ x $ 50,000

= $ 21,204.88 Approximately

Feel free to ask in case of any query relating to this question

Answer 2

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