The chairman and Board of Directors of the UP desire to awarda P3,000 scholarship annually to deserving students for as long as its scholarshipfund last. The fund was started September 1, 2007 by a donor in the amount of P18,000. UPinvested this amount at that time at 8% per annum, and plans on adding P600 each year to the fundfromits dues starting September 2008 for as long as awards are made.a. Draw the cash flow diagram.b. For how many years starting September1, 2008 can scholarship be awarded?c. What will be the balance in the fund after the last award is made?Show the formula and complete solution

a. Cash Flow Diagram Year End Balance = Amount Invested + Additional investment + Interest…

Answered: a. Draw the cash flow diagram. b. For…

a. Draw the cash flow diagram. b. For how many years starting September1, 2008 can scholarship be awarded? c. What will be the balance in the fund after the last award is made?

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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Question

The chairman and Board of Directors of the UP desire to award
a P3,000 scholarship annually to deserving students for as long as its scholarship
fund last. The fund was started September 1, 2007 by a donor in the amount of P18,000. UP
invested this amount at that time at 8% per annum, and plans on adding P600 each year to the fund
from
its dues starting September 2008 for as long as awards are made.
a. Draw the cash flow diagram.
b. For how many years starting September1, 2008 can scholarship be awarded?
c. What will be the balance in the fund after the last award is made?
Show the formula and complete solution

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