Any additional cost from the university budget

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Reference no: EM131047600

Suppose you would like to fund the salary of a professor of finance at your college so that the university could hire an additional faculty member without incurring any additional cost from the university budget. You estimate the salary to be $100,000 per year the first year the position is established, and you want to include a provision to increase the salary each year to cover inflation, estimated to be 3% per year. If you want this new position to be funded into perpetuity (forever), how much money must you donate to the university foundation today if the foundation can invest the funds at 5% per year? (Answer to the nearest dollar.)

Reference no: EM131047600

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