321.1
Assume that you want to endow a scholarship that will pay $10,000 per year forever. Your money can be invested at 9% per year. If you want the first scholarship to be awarded today, how much will it cost to endow the scholarship? (1pt)
The cost of a regular perpetuity would be PV=CF/r, or $10,000/0.09 = $111,111.11. However, this perpetuity starts immediately, so you need to add on the initial payment of $10,000 for a total of $121,111.11.