Question

Susan would like to set up an endowment fund which would award a student with a scholarship of $500 at the end of each year. The scholarship will continue in perpetuity. The interest rate is 6% compounded semi-annually, and the first award is made one year from today. How much should Susan invest today?

Answer 1

annual interest is
P((1+.06/2)^2-1)

so, you need

P(1.03^2-1) = 500
P = $8210.18