You Dream of Endowing a Chair in Finance at the Local

question 83

Multiple Choice

You dream of endowing a chair in finance at the local university that will provide a salary of $150,000 per year forever,with the first cash flow to be one year from today.If the university promises to invest the money at a rate of 5% per year,how much money must you give the university today to make your dream a reality?

• A)$3,000,000
• B)$15,000,000
• C)$2,857,143
• D)This question cannot be answered.

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Definitions:

Commerce Clause

A provision in the U.S. Constitution granting Congress the power to regulate interstate and international commerce, serving as a foundational element for federal laws affecting the economy.

State Tax

Taxes imposed by individual states on individuals, businesses, or property to generate revenue for state governments.

Interstate Commerce

Economic activities that cross state borders, governed by federal regulations to ensure free and fair trade among states.

Wholly-Owned Subsidiary

A company whose entire stock is held by another company, making it fully controlled by the parent company.