Question
A wealthy graduate of a local university wants to fund a scholarship to help future students to cover the annual cost of tuition for one
A wealthy graduate of a local university wants to fund a scholarship to help future students to cover the annual cost of tuition for one student each year, and wants the scholarship to last forever. To adequately prepare for the administration of the scholarship, the university will begin awarding it starting in three years. Tuition this year for one student is $ 19,000 and is expected to stay constant in real terms into perpetuity. If this scholarship fund is to be invested to earn an annual real return of 5 percent, how much must be contributed to the fund today?
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