A university trust fund is valued at £50 million today. Suppose that no further deposit will be made into the fund and the investment return of the fund is 6.25%. Will the fund have enough balance to support the university's annual expenditure of £4 million perpetually?

Question

Answer

Yes, because the present value of the future expenditures is greater than the current value of the fund.

Answer

No, because the present value of the future expenditures is greater than the current value of the fund.

Answer

Yes, because the fund's investment return is positive.

Answer

None of the above.

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A university trust fund is valued at £50 million today. Suppose that no further ...

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