You would like to establish a trust fund that would provide annual scholarships of $100,000 forever.How much would you have to deposit today in one lump sum to achieve this goal if you can earn a guaranteed 4.5 percent rate of return?

Question

Quizplus · Accepted Answer

To provide perpetual scholarships of $100,000 with a 4.5% return, you need to deposit an amount equal to the scholarship divided by the rate of return: $100,000 / 0.045 = $2,222,222.

You Would Like to Establish a Trust Fund That Would