Question
A donor gives $3 million to fund scholarships at a university. The first scholarships will be paid in exactly one year and future scholarships will
A donor gives $3 million to fund scholarships at a university. The first scholarships will be paid in exactly one year and future scholarships will be paid every subsequent year forever. In other words, the scholarship fund represents a perpetuity. If the university's endowment pays an annual rate of return of 3.6%, what is the total amount of scholarships that can be awarded each year? Round your answer to the nearest penny.
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Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng
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