Bill is interested in creating an ongoing annual endowment that gives Sheridan College $120,000 annually

Accounting Oct 21, 2020

Bill is interested in creating an ongoing annual endowment that gives Sheridan College $120,000 annually. How much money must he set aside today assuming an interest rate of 4%?
1). $125,000.00

2). $3,000.000.00

3). $2,577,862.15

4). $5.880,000.00

Expert Solution

Computation of the present value:-

Present value = Annuity / Interest rate

= $120,000 / 4%

= $3,000,000

Correct option is 2). $3,000,000.00

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