11. You do not have children yourself and therefore you decide to create an endowment to pay out annual study grants to

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11. You do not have children yourself and therefore you decide
to create an endowment to pay out
annual study grants to bright children from less fortunate
families. The endowment takes the form of a
perpetual savings account with interest rate of 5% (annualized).
Every year you would like the
endowment to pay out an amount of study grants starting next year
with €50,000. You would like the
total sum of study grants to nominally grow with 2% annually to
compensate for inflation. The
required endowment to guarantee these future cash outflows comes
closest to:
A) €1,500,000
B) €1,600,000
C) €1,700,000
D) €1,800,000
Ans: C