In 30 Years,you Plan to Set Up a Fellowship Fund

question 4

Multiple Choice

In 30 years,you plan to set up a fellowship fund for your university that pays out $100,000/year in perpetuity with an annually compounded discount rate of 5%.In order to set up the fund in 30 years,how much do you need to save each year (starting this year) assuming you can get a semi-annually compounded return of 10% on your savings for the next 30 years?

• A) $66,666.67
• B) $11,595.56
• C) $21,215.49
• D) $30,744.90
• E) $30,000.00

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Definitions:

Derated

The process of operating a device below its rated maximum capability in order to prolong its life or ensure safety under certain conditions.

Raceway

An enclosed conduit that forms a physical pathway for electrical wiring, protecting wires and cables from damage and interference.

Ampacity

The maximum amount of electric current a conductor or device can carry before sustaining immediate or progressive deterioration.

Circular Mils

A unit of area used specifically in the calculation of wire cross-sectional areas, defined as the area of a circle with a diameter of one mil (one-thousandth of an inch).