medium · Principles of Finance time-value-of-money
A charitable foundation endowment expects to fund a scholarship of $80,000 next year.
The scholarship is intended to grow by 3% annually to keep pace with inflation. If the foundation's required rate of return is 7%, what is the present value of this growing perpetuity?
- $2,000,000
- $800,000
- $1,142,857
- $2,666,667
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