You have decided to endow a Chair in Finance at Whatsamatta University
How much money must you deposit into the endowment account today if the Chair pays $125,000 per year forever (first payment one year from today) and is invested at a rate that pays out 4.50% per year?
A) $277,777.78
B) $2,902,777.78
C) $2,777,777.78
D) There is not enough information to answer this question.
C
Explanation: C) PV = PMT/r = $125,000/0.045 = $2,777,777.78.
You might also like to view...
A competitive business environment is now characterized by all of the following characteristics except:
A) unprecedented degrees of turbulence. B) dynamism. C) unpredictability. D) inadaptability. E) environmental responsiveness.
A disadvantage of participatory budgets is that
a. there is a high degree of acceptance of the goals and objectives by operating management. b. they are usually more realistic. c. they lead to better morale and higher motivation. d. they usually require more time to prepare.
When making a decision on how to discipline an employee, Peter asks himself how he would feel if someone made the decision about him. It appears Peter is using the ______ ethical approach.
A. Golden Rule B. code of ethics C. stakeholders’ approach D. discernment and advice
One or more factors are manipulated under controlled conditions in which research technique?
a. questionnaire b. observation c. experiment d. secondary data analysis