Question

After a recent sale of your business, you decided to donate $1 million to your local university to fund a scholarship fund. Assume the university can earn 6% interest rate on its investments. You want the scholarship to be paid out annually, and the first scholarship to be paid out in one year. You also want that the annual scholarship amount increases with inflation thereafter. The inflation is expected at 2%. What will be the amount of the first year scholarship and the second year scholarship?

Group of answer choices

$ 40,800; $ 42, 432

$ 40,000; $ 41,600

$60,000; $ 61,200

$ 40,000; $ 40,800

$ 40,800; $ 41,616

$ 40,000; $ 42,4000

Answer 1