Question

Your graduating class has decided to establish an endowment for a scholarship to be awarded to outstanding future students admitted to the school. The university suggests an endowment that generates $90,000 a year forever. The discount rate is 6%. If your class pledges $120,000 a year (starting next year), how long will it take to have enough to establish the endowment? (Hint: You only start awarding the scholarships after you have enough resources for the endowment to generate the amount recommended by the university.)

Answer 1

Hence, It will take 14.54 or 15 years