A university alumni group wishes to provide an annual scholarship in the amount of $\$ 1500$ beginning next year. If the scholarship fund will earn an interest rate of $5 \% /$ year compounded continuously, find the amount of the endowment the alumni are required to make now.
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This means that the endowment they make now should be able to generate $1500 every year, forever, at an interest rate of 5% per year. The formula for the present value of a perpetuity (a series of equal payments made at regular intervals indefinitely) when Show more…
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