1. You decide to give SCU an endowment that will pay out $50 K per year forever,with a continuously compounded annual increase of 3%. Assuming that you canlock in an interest rate of 5%, gure out how much this endowment would cost.What is the total value of this income stream?
1. You decide to give SCU an endowment that will pay out $50 K per year forever,with a continuously compounded annual increase of 3%. Assuming that you canlock in an interest rate of 5%, gure out how much this endowment would cost.What is the total value of this income stream?
4. Let's revisit the income stream from your endowment to SCU in the rst prob-lem, which is $50 K per year with 3% continuously compounded annual increase.Instead of the 5% investment rate we used in Problem 1, compute the presentvalue of this income stream (lasting forever) assuming a constant interest rater. What is the
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