Question
Asked Oct 13, 2019
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You want to endow a scholarship that will pay $11,000 per year forever, starting one year from now. If the school’s endowment discount rate is 6%, what amount must you donate to endow the scholarship?

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Expert Answer

Step 1

Framework:

If P is the perpetuity and r is the discount rate, then PV of a perpetuity = P / r

Amount ...

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