Answer:
Step-by-step explanation:
Find the present value of the cost of new equipment every 6 years using the formula for present value of an annuity:
PV = A * (1 - (1 + r)^-n) / r
Where:
PV = Present value
A = Annuity payment
r = Interest rate
n = Number of periods
In this case, A = $750,000, r = 8%, and n = 6 years. Plugging these values into the formula, we get:
PV = $750,000 * (1 - (1 + 0.08)^-6) / 0.08 = $3,519,702.81
Add the present value of the cost of new equipment to the initial construction and equipment costs:
Total present value = $4,000,000 + $1,500,000 + $3,519,702.81 = $9,019,702.81
This is the amount of money that the university needs to have in an endowment in order to earn 8% interest and cover the costs of the lab and new equipment.
Therefore, the required endowment is $9,019,702.81.