You planned to donate $4 million to your alma mater to fund an  endowed professorship.  Given an interest rate of 7% per year, the professor would be able to collect  $200,000 per year from your generosity. The inflation rate is expected to be 2% per  year.

How much can the professor be paid in the first year in order to allow her annual  salary to increase by 2% each year and keep the principal intact?

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