Question

You want to endow a scholarship that will pay $ 9 comma 000$9,000 per year​ forever, starting one year from now. if the​ school's endowment discount rate is 10 %10%​, what amount must you donate to endow the​ scholarship?

Answer 1

The amount that will be needed in 1 year's time for endowment is :
amount/(rate)
=9000/0.1
=$90,000
Therefore the current amount needed for donation will be given by:
PV=P(1+r/100)^-n
=90000(1+10/100)^-1
=90000/1.1
=$81,818.2

Answer 2

$90000

Step-by-step explanation:

For solving this question you need to make a present value (PV) calculation, where PV is the present value of a future sum of money base on a given rate of return, where the formula to calculate it is:

PV = C/R, where C is the cash flow and R is the discount rate

Therefore,

PV = $9000/10% = $90000