How large must the endowment be

Reference no: EM131111595

You have decided to endow your favorite university with a scholarship. It is expected to cost $6,000 per year to attend the university into perpetuity. You expect to give the university the endowment in 10 years and will accumulate it by making equal annual (end-of-year) deposits into an account. The rate of interest is expected to be 10% for all future time periods.

a. How large must the endowment be?

b. How much must you deposit at the end of each of the next 10 years to accumulate the required amount?

Reference no: EM131111595

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