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A donor wishes to establish a scholarship at the university which will pay $5000 in year 1, and then the annual scholarship amount grows at
A donor wishes to establish a scholarship at the university which will pay $5000 in year 1, and then the annual scholarship amount grows at 4% per year in perpetuity. If the opportunity cost of capital is 8%, how much should the donor give today?
a) $300,000
b) $175,000
c) $225,000
d) $125,000
e) $95,000
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