A Generous Benefactor to a Local Ballet Plans to Make

Multiple Choice

A generous benefactor to a local ballet plans to make a one-time endowment that would provide the ballet with $150,000 per year into perpetuity. The rate of interest is expected to be 5 percent for all future time periods. How large must the endowment be?

A) $ 300,000
B) $3,000,000
C) $ 750,000
D) $1,428,571