A former student of London university who wishes to donate to alma-matters development fund, has offered anyone of the following plans:Plan A: $ 60,000.00 NowPlan B:$ 15,000.00 per year for 8 years beginning one year from nowPlan C:$50,000.00 3 years from now and another $80,000.00 5 years from now.The only condition placed on the donation is that the university agrees to spend the money on applied research.From the universitys perspective, it wants to select the plan which maximizes the buying power of the money received,so it has asked you to evaluate the plans to account for inflation in the calculations.If the university wants to earn a real 10% per year on its investment and the inflation rate is expected to average 3% per year,which plan should the university accept and comment why?
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