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An alumni association has decided to set up a scholarship fund for outstanding juniors. They have pledged to pay an amount of $15,000 into the
An alumni association has decided to set up a scholarship fund for outstanding juniors. They have pledged to pay an amount of $15,000 into the fund four years from now, subsequently increasing it by $3,000 every four years (i.e. $18,000 at EOY8, $21,000 at EOY 12, $24,000 at EOY 16.). How much would the alumni association have to invest today at an interest rate of 5% to ensure that this cash flow is sustained in the following two scenarios?
a.) For 40years b.) Forever
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