An anonymous donor wishes to give an endowment that will initially payout $50,000 per year forever. Assuming they can secure a 4% interest rate, how much would the donor need to contribute to the endowment so that I can pay out forever if a) it continues to pay out $50,000 per year continuously? b) the payouts, have a continuously compounded annual increase of 3%? c) the payouts, increased by $4000 per year continuously?
An anonymous donor wishes to give an endowment that will initially payout $50,000 per year forever. Assuming they can secure a 4% interest rate, how much would the donor need to contribute to the endowment so that I can pay out forever if a) it continues to pay out $50,000 per year continuously? b) the payouts, have a continuously compounded annual increase of 3%? c) the payouts, increased by $4000 per year continuously?
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter2: Using Financial Statements And Budgets
Section: Chapter Questions
Problem 7FPE: Funding a retirement goal. Austin Miller wishes to have 800,000 in a retirement fund 20 years from...
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An anonymous donor wishes to give an endowment that will initially payout $50,000 per year forever. Assuming they can secure a 4% interest rate, how much would the donor need to contribute to the endowment so that I can pay out forever if
a) it continues to pay out $50,000 per year continuously?
b) the payouts, have a continuously compounded annual increase of 3%?
c) the payouts, increased by $4000 per year continuously?
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