Question
Please include explanation of steps :) Suppose you wish to set aside an endowment to establish and maintain and 80-acre tract of prairie. You have
Please include explanation of steps :)
Suppose you wish to set aside an endowment to establish and maintain and 80-acre tract of prairie. You have identified an 80-acre plot that will work and it will cost $1,800 per acre today. Next year, you will need to spend $20 per acre to burn off existing plants and $200 per acre on seed for new prairie plants. In each of the next 5 years (including next year) you expect to spend $40 per acre introducing new species to the land. Finally, you expect to pay $30 per year per acre in maintenance beginning next year and growing at 4.5% each year thereafter in perpetuity. How much money do you need to establish your endowment if you anticipate an 11% return?
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