You have decided to endow a Chair in Finance at Whatsamatta ...

[berenicecastro]

You have decided to endow a Chair in Finance at Whatsamatta University.
 
  How much money must you deposit into the endowment account today if the Chair pays 125,000 per year forever (first payment one year from today) and is invested at a rate that pays out 4.50 per year?
  A) 277,777.78
  B) 2,902,777.78
  C) 2,777,777.78
  D) There is not enough information to answer this question.

Question 2

Federal deposit insurance insures each deposit you have with a bank up to 100,000.
 
  Indicate whether the statement is true or false

[spencer.martell]

Answer to Question 1

C
Explanation: C) PV = PMT/r = 125,000/0.045 = 2,777,777.78.

Answer to Question 2

FALSE

[berenicecastro]

Excellent

[31809pancho]

Gracias!