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Robert became quite well-to-do as founder and president of Carlson Auto Paint and Supply, Inc. (CAPS). Now, he wants to start a permanent fund to support research directed toward improved sustainability of painted surfaces at his alma mater. He plans to contribute money now so that $200,000 per year can be withdrawn each year forever, beginning in year 7. If the fund earns interest at a rate of 8% per year, how much money must be donated now

Answer :

Answer:

The answer is "1475,000".

Explanation:

Given:

[tex]n=6\ year \ \ \ \text{because it start with 7 beginning year} \\\\r=8\% = 0.08\\\\P= \$ 200,000[/tex]

calculating the 6-year future value:

[tex]= \frac{\$200,000}{0.08} \\\\= \$2,500,000[/tex]

Using formula:

[tex]\bold{PV=FV(1+r)^{-n}}[/tex]

      [tex]=\$2,500,000(1+0.08)^{-7} \\\\ =\$2,500,000(0.59)\\\\=\$1475,000[/tex]

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