23)	You are a wealthy individual that wants to donate money to your alma mater. You are also an animal lover, so you want to endow your alma mater with a laboratory that studies the dreams of dogs and cats. You want to ensure that this laboratory has $100,000 a year forever. This is an example of what?
24)	The money that you will donate will earn 9% on the investment. How much must you donate to endure this endowment?

23) This is an example of a **perpetuity**, which is a type of financial arrangement that provides a consistent payment or income forever. In this case, you want to endow a laboratory with $100,000 per year indefinitely.

24) To calculate how much you need to donate for the endowment, we can use the formula for the present value of a perpetuity:

\[
PV = \frac{A}{r}
\]

Where:
- $PV$ is the present value (the amount you need to donate),
- $A$ is the annual payment or amount to be provided ($100,000),
- $r$ is the rate of return (9% or 0.09).

Substituting the values:

\[
PV = \frac{100,000}{0.09} = 1,111,111.11
\]

Thus, you must donate **$1,111,111.11** to ensure the laboratory has $100,000 annually forever.

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Would you like more details or have any questions about this process?

Here are 5 related questions:
1. What are some examples of perpetuities in real life aside from endowments?
2. How does inflation affect perpetuities over time?
3. What would happen if the interest rate changed after the donation?
4. How is the perpetuity formula adjusted for payments that do not last forever?
5. What role does compound interest play in investments like this?

**Tip:** When setting up an endowment, consider the potential impact of inflation on future purchasing power and explore options for adjusting the payment structure accordingly.

23) You are a wealthy individual that wants to donate money to your alma mater. You are also an animal lover, so you want to endow your alma mater with a laboratory that studies the dreams of dogs and cats. You want to ensure that this laboratory has $100,000 a year forever. This is an example of what?
24) The money that you will donate will earn 9% on the investment. How much must you donate to ensure this endowment?

Learn how to calculate the amount needed to donate to provide $100,000 per year forever for a laboratory studying the dreams of animals. Using the perpetuity formula, this problem demonstrates key financial concepts such as present value and annual returns at 9%. Perfect for university-level finance students or advanced high school learners.

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