=+ P5–29 Creating an endowment On completion of her introductory finance course, Marla Lee was so pleased with the amount of useful and interesting knowledge she gained that she convinced her parents, who were wealthy alumni of the university she was attending, to create an endowment. The endowment will provide for three students from low-income families to take the introductory finance course each year in perpetuity.

The cost of taking the finance course this year is $200 per student (or $600 for 3 students), but that cost will grow by 2% per year forever. Marla’s parents will create the endowment by making a single payment to the university today. The university expects to earn 6% per year on these funds.