1. You want to endow an annual graduation party at your university. You want the event to be a memorable one, so you budget $30,000 per year forever for the party. If the university earns 8% per year on its investments, and if the first party is in one years time, how much will you need to endow the party?

b. Before accepting the money the President of the student association has asked that you increase the donation to account for the effect of inflation on the cost of the party in future years. Although $30,000 is adequate for next years party, the president estimates that the partys cost will rise by 4% per year thereafter. To satisfy the presidents request, how much do you need to donate now?