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Creating an endowment  Personal Finance Problem   On completion of her introductory finance​ course, Marla Lee was...

Creating an endowment  Personal Finance Problem   On completion of her introductory finance​ course, Marla Lee was so pleased with the amount of useful and interesting knowledge she gained that she convinced her​ parents, who were wealthy alumni of the university she was​ attending, to create an endowment. The endowment will provide for three students from​ low-income families to take the introductory finance course each year in perpetuity. The cost of taking the finance course this year is ​$400 per student​ (or ​$1,200 for 3​ students), but that cost will grow by 2.9​% per year forever.​ Marla's parents will create the endowment by making a single payment to the university today. The university expects to earn 5​% per year on these funds.

a.  What will it cost 3 students to take the finance class next​ year?

b.  How much will​ Marla's parents have to give the university today to fund the endowment if it starts paying out cash flow next​ year?

c.  What amount would be needed to fund the endowment if the university could earn 9​% rather than 5​% per year on the​ funds?

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