A school fund establishes that the following deposits must be made: Year 1, $2,000; Year 2, $2,000 + 500; Year 3, $2,000+ (2)500; . . . ; Year 10, $2,000 + (9)500. Beginning in the 11th year, the fund will pay a $X scholarship perpetually. Assuming a 10% interest rate. How big can the scholarship payment be?
A school fund establishes that the following deposits must be made: Year 1, $2,000; Year 2, $2,000 + 500; Year 3, $2,000+ (2)500; . . . ; Year 10, $2,000 + (9)500. Beginning in the 11th year, the fund will pay a $X scholarship perpetually. Assuming a 10% interest rate. How big can the scholarship payment be?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A school fund establishes that the
following deposits must be made:
Year 1, $2,000; Year 2, $2,000 + 500;
Year 3, $2,000+ (2)500; ; Year
10, $2,000 (9)500. Beginning in
the 11th year, the fund will pay a $X
scholarship perpetually. Assuming a
10% interest rate. How big can the
scholarship payment be?
.
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