Math Problem Statement
A university would like to establish a perpetuity, the interest from which will fund a scholarship for a talented student each year. The value of this prize should be $3500 per year.
a) If the interest on this investment is 3.6% per annum, how much will the university need to invest?
The university only has $60000 to invest.
b) What annual interest rate is required to pay the scholarship in perpetuity? Round your answer to two decimal places.
Solution
Math Problem Analysis
Mathematical Concepts
Finance
Perpetuity
Formulas
Present value of a perpetuity: P = A / r
Theorems

Suitable Grade Level
College Level
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