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) A former civil engineering student makes a $ 2 5 , 0 0 0 donation to create an endowed scholarship. The Price College of
A former civil engineering student makes a $ donation to create an endowed scholarship.
The Price College of Engineering allows the person to donate $k per year for years years after
which the interest was going to be spent on a deserving undergraduate. The average stock market return over
the last years has been with reinvesting dividends and without reinvesting dividends. However,
given a inflation rate, the university recognized that this would result in a dwindling amount in future years
in terms of real values so they decided to only give out half the amount as a scholarship and reinvest the other
half each year.
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