Beginning next year, a foundation will supportan annual event on campus with the earnings of a$420,000 gift it received this year. It is felt that 8.4%interest will be realized for the first 12 years, but thatplans should be made to anticipate an interest rate of6% after that time. What amount should be added tothe foundation now to fund the event at the $45,000level into infinity?
Beginning next year, a foundation will supportan annual event on campus with the earnings of a$420,000 gift it received this year. It is felt that 8.4%interest will be realized for the first 12 years, but thatplans should be made to anticipate an interest rate of6% after that time. What amount should be added tothe foundation now to fund the event at the $45,000level into infinity?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Beginning next year, a foundation will support
an annual event on campus with the earnings of a
$420,000 gift it received this year. It is felt that 8.4%
interest will be realized for the first 12 years, but that
plans should be made to anticipate an interest rate of
6% after that time. What amount should be added to
the foundation now to fund the event at the $45,000
level into infinity?
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