A donor wishes to endow a scholarship to a certain university in the name of a certain professor. The scholarship is to provide $50000 per year for the first 8 years and starting 11 years from now $200000 every 3 years (forever). If the university expects to be able to earn a nominal interest of 16% per year compounded continuously on the endowment, how much must the donor give now if the first scholarship is to be given 1 year from now?
A donor wishes to endow a scholarship to a certain university in the name of a certain professor. The scholarship is to provide $50000 per year for the first 8 years and starting 11 years from now $200000 every 3 years (forever). If the university expects to be able to earn a nominal interest of 16% per year compounded continuously on the endowment, how much must the donor give now if the first scholarship is to be given 1 year from now?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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3. A donor wishes to endow a scholarship to a certain university in the name of a certain professor. The scholarship is to provide $50000 per year for the first 8 years and starting 11 years from now $200000 every 3 years (forever). If the university expects to be able to earn a nominal interest of 16% per year compounded continuously on the endowment, how much must the donor give now if the first scholarship is to be given 1 year from now?
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