She lives now much will S usan receive when her aunt dies? A trust fund is to be

Question

She lives now much will S usan receive when her aunt dies? A trust fund is to be established for three purposes: (1) to provide $750, 000 for the construcation and $250, 000 tor the initial equipment of a small engineering laboratory; (2) to pay the $150. 000 per year laboratory operating cost; and (3) to pay for $ 100, 000 of replacement equipment every 4 years, beginning 4 years from now. At 6% interest, how much money is required in the trust fund to provide for the laboratory and equipment and its perpetual operation and equipment replacement?

Explanation / Answer

a.money for purpose 1: 750000+250000
b. money for purpose 2: 150000/(1.06)1 + 150000/(1.06)2 + 150000/(1.06)3 + 150000/(1.06)4

c. money for purpose 3: 100000/1.064

total money required = a+b+c

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