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To assure your immortality at South College, you wish to endow a $5,000 scholarship bearing your name that will awarded every year forever. President is
To assure your immortality at South College, you wish to endow a $5,000 scholarship bearing your name that will awarded every year forever. President is delighted, and informs you that the assumed rate of return on endowments is 2.5%. How large of a donation must you make to South College? Or, in other words, what is the present value of perpetuity of $5,000 per year at a discount rate of 2.5%?
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