A Generous Philanthropist Plans to Make a One-Time Endowment to a Renowned

question 4

Multiple Choice

A generous philanthropist plans to make a one-time endowment to a renowned heart research center which would provide the facility with $250,000 per year into perpetuity. The rate of interest is expected to be 8 percent for all future time periods. How large must the endowment be?

• A) $2,314,814
• B) $2,000,000
• C) $3,125,000
• D) $3,000,000

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