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Jon Hamm would like to establish a fund for cancer research at St. Jude Children’s Research Hospital in downtown Memphis, Tennessee. Researchers at the hospital have informed Jon that they would like to receive an additional $5M per year to help them find a cure. Jon has agreed to deposit $8.5M now into a fund that pays interest at 5% per year. He will also deposit $7M into the fund five years from now. Eight years from now, Jon will make a deposit $5M into the fund and he will continue to deposit money until the fund can support $5M perpetual withdrawals from the fund. Researchers would like to begin withdrawing $5M per year from the 2 fund twenty years from now. Compute the number of years (to two decimal places) that Jon will have to make the $5M donations in order for the researchers and Jon to meet their financial objective.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92801420

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