part A and B

21) (25 pts) The Foundation for IUP manages an endowment currently valued at $92 million. This money comes from private donations, student housing revenue and returns from a diversified portfolio The Foundation wants to know how much it must receive in private donations annually for the endowment to reach $1 billion in 50 years given the following assumptions: Assume today is January 1, 2019 and the endowment is at 592 million The donations are received at the end of each year The Foundation disburses 4.5% of the total endowment at the end of each year for scholarships and other support for the accomplishment of university objectives (assume these distributions occur right before the donations are received each year) The Foundation collects $2.1 million at the end of each year from student housing revenue (assume these revenues are collected immediately after the 4.5% disbursements above each year) The return on the endowment's diversified portfolio is 7.5% each year Use Excel to solve this problem and attach your table to the exam, but please write your answers below to the following questions: a) (25 pts) How much in annual private donations must the Foundation receive for the endowment to reach $1 billion in 50 years given the criteria above? ANSWER: b) (3 pts) If we assume an average rate of inflation of 3% for the next 50 years, what is the present value of this future $1 billion endowment