QUESTION 2 Suppose a University has an endowment of 706 million dollars placed in a bank account earning a real rate of interest (nominal rate of interest - inflation) of 1% per year. What is the maximum amount of annual withdrawal a university can make to sustain the real value of its endowment?

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A:

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A: Payback period is the period within which the initial investment is recovered.

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.