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Find which is closest to the annual salary payment

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Reference no: EM132770376

After a retiring from a successful business? career, you would like to make a donation to your university. This donation will go into the? school's endowment pool and the returns generated from the donation will support the salary of a new professor in the business school on a perpetual basis. The university expects to earn returns of? 5.5% on its endowment pool. You may assume that any distributions to support the salary will be made annually.

Problem 1: You can make a donation today? (t=0) in the amount of? $2,000,000. The first cash flow distribution from your donation to cover the? professor's salary will take place in one year? (at t=1). Which of the following is closest to the annual salary payment that can be made as a result of your? donation?

A. ?$2,000,000
B. ?$110,000
C. ?$80,000
D. ?$363,636

Reference no: EM132770376

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