The University of Maine has established a computer lab maintenance fund to assure that there will be a perpetual stream of $100,000 per year to provide for routine maintenance repairs.

a. How much money does the University need to deposit today at 7% (annual market interest rate) to assure this stream perpetually?

b. If the average inflation rate is projected to be 2% per year for the foreseeable future, and the University wants to account for the effects of inflation in their original establishment of the perpetuity, will the original deposit change and why or why not?