A wealthy donor endows a chaired professorship at Stern, i.e. donates a lump-sum amount today. If the interest rate is 8% how much must be endowed today to provide the following end-of-year salary payment alternatives?

(a) $100,000 per year for 25 years

(b) $100,000 per year in perpetuity

(c) A perpetuity that pays $100,000 the first year and grows at 4% every year thereafter