A University is offering a charitable gift program. A former student who is now 50 years old is consider the followingoffer: The student can invest $9,300.00 today and then will be paid a 8.00% APR return starting on his 65th birthday (i.eFor a $10,000 investment, a 9% rate would mean $900 per year). The program will pay the cash flow for this investmentwhile you are still alive. You anticipate living 22.00 more years after your 65th birthday. The former student wants areturn of 6.00% on his investments, but would like to consider this opportunity.What is the annual cash flow from the investment starting on the student's 65th birthday?

An annuity is a financial product or contract that provides a series of regular payments or income…

Answered: A University is offering a charitable…

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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A wealthy graduate of a local university wants to establish a scholarship to cover the full cost of one student each year in perpetuity at her university. To adequately prepare for the administration of the scholarship, the university will begin awarding it starting in three years. The estimated full cost of one student this year is $32,000 and is expected to stay constant in real terms in the future. If the scholarship is invested to earn an annual real return of 10 percent, how much must the donor contribute today to fully fund the scholarship? Note: Negative value should be indicated by a parenthesis. > Answer is complete but not entirely correct. $(240,421) X Contribution
You wish to establish a permanent scholarship at Bond University providing a worthy student with $1000 annually. If invested monies generate an 8% return, how much is needed in the scholarship fund?
Imagine you are a philanthropist who would like to donate to a charity that provides shelter and assistance to homeless individuals. You would like to donate enough money to the charity to ensure that they can provide shelter for 12 homeless individuals every year in perpetuity. The cost of providing shelter per individual is $60 per day. If your investment fund pays a return of 2% per year, how much do you need to donate to the charity now so that they can provide shelter for 1200 individuals every day in perpetuity? Enter your answer to the nearest cent (two decimal places)
A wealthy graduate of a local university wants to establish a scholarship to cover the full cost of one student each year in perpetuity at her university. To adequately prepare for the administration of the scholarship, the university will begin awarding it starting in three years. The estimated full cost of one student this year is $38,000 and is expected to stay constant in real terms in the future. If the scholarship is invested to earn an annual real return of 5 percent, how much must the donor contribute today to fully fund the scholarship?
Jeremiah Wood wants to set up a fund to pay for his daughter's education. In order to pay her expenses, he will need $22,000 in four years, $23,400 in five years, $24,600 in six years, and $26,100 in seven years. If he can put money into a fund that pays 5 percent interest, what lump-sum payment must Jeremiah place in the fund today to meet his college funding goals? Round the answer to the nearest cent. Round PV-factor to three decimal places.
4. Mr. Richman has offered to give the New Life Hospice Center $100,000 today or $300,000 when he dies. If the hospice center earns 14% on its investments, and it expects Mr. Richman to live for 12 years, which alternative should they take? Take the gift now or later? Discuss in narrative and include your calculations and citations with your answer.
A grateful alumnus wishes to provide a scholarship of $1,800 per year for 4 years to his alma mater, with the first scholarship awarded on his 59th birthday. If the money is worth an annual rate of 5.1%, compounded annually, how much money must he donate on his 49th birthday? Round your answer to the nearest cent. O a. $1,362.43 b. $2,601.05 c. $5,764.90 d. $4,069.80 e. $5,485.16
. James decided to fund a school in Orange County in perpetuity. The first payment will be made three years from today (at the end of year three) and will be $5,320. Each year after that, the school will receive payment from James annually. The payment will increase at a rate of 3% per year after the first payment. If the annual interest rate is 9%, what is the present value of this endowment?
In a family members will, they would like to establish a perpetual trust to provide for the maintenance of a school's learning lab. If the annual maintenance is fixed at $12,500 per year and the trust can earn 5% interest, how much money must be set aside in the trust?
THIS QUESTION HAS TWO PARTS After a retiring from a successful business career, you would like to make a donation to your university. This donation will go into the school's endowment pool and the returns generated from the donation will support the salary of a new professor in the business school on a perpetual basis. The university expects to earn returns of 5.5% on its endowment pool. You may assume that any distributions to support the salary will be made annually. Part A) You can make a donation today (t=0) in the amount of $2,500,000. The first cash flow distribution from your donation to cover the professor's salary will take place in one year (at t=1). Which of the following is closest to the annual salary payment that can be made as a result of your donation? A. $137,500 B. $454,545 C. $2,500,000 D. $100,000 Part B) After further discussions, the university determines that the employment agreement with the new professor will call for annual salary increases of 2%. Given this…
William wants to establish a scholarship fund at his former university. He would like the recipients to receive an annual $5300 award starting next year. He would like to fund 10 years of these awards. Assuming the university can earn 11% on their donated funds, how much of a donation must William make today to fund the scholarships? $31212.92 $36512.92 $88626.65 $53000.00

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