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You wish to establish a scholarship fund for students at Clever College. The fund would pay an annual scholarship that would start at $5,000 awarded

You wish to establish a scholarship fund for students at Clever College. The fund would pay an annual scholarship that would start at $5,000 awarded one year from now and increase by 3.5% per year forever. If the fund could earn an effective annual return of 6%, how much would you need to contribute to the scholarship fund today for it to be fully funded?

  1. $205,000
  2. $207,000
  3. $210,000
  4. $214,000
  5. $200,000

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