Mike wants to donate $5,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of 3.87% p.a. compounded half-yearly (2-3.87% p.a.) and the first scholarship will be first awarded 3.5 years after the date of thedonation.(a) What is the amount of the annual scholarship (rounded to two decimal places)?a. 212767.99b. 106479.89c. 216169.57d. 215020.17

To determine the amount of the annual scholarship that Mike can establish, we need to calculate the…

Answered: Mike wants to donate $5,000,000 to…

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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Similar questions

A family wishes to accumulate 50,000 in a college education fund at the end of 20 years. If they deposit 1,000 in the fund at the end of each of the first 10 years and 1,000+ X in the fund at the end of each of the second 10 years, find X if the fund earns 8% effective.
Solve by using the sinking fund or amortization formula. Betty Price purchased a new home for $245,000 with a 10% down payment and the remainder amortized over a 15 year period at 9% interest. (a) What amount (in $) did Betty finance? $ (b) What equal monthly payments (in $) are required to amortize this loan over 15 years? (Round your answer to the nearest cent.) $ (c) What equal monthly payments (in $) are required if Betty decides to take a 20 year loan rather than a 15 year loan? (Round your answer to the nearest cent.) $
Your grandmother left you an inheritance in the form of a trust. The trust agreement states that you are to receive R2 500 on the first day of each year, starting immediately and continuing for fifty years. What is the value of this inheritance today if the applicable discount rate is 6,20%? a. b. d. R66 811,30 R40 706,92 R39 942,42 R49 942,42
Mr. Glen Secundo won a lottery paying P1,400,000 at the beginning of each year for 15 years. Find the amount must set aside today to satisfy this annuity at 13% compounded annually.
For her daughter's university education, Carla Hackl has invested an inheritance in a fund paying 9.2% compounded quarterly. If ordinary annuity payments of $4750.00 per month are to be made out of the fund for 5 years and the annuity begins 7.75 years from now, how much was the inheritance
Susan won the lottery today which will pay an annual perpetuity of X, with the first payment occurring five years from today. The perpetuity has a present value of 100,000 based on an annual effective interest rate of 1% for the first ten years and 5% for all years thereafter. Calculate X. A. 4,100 B. 4,224 C. 4,357 D. 4,401 E. 5,696
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?
Ee 86.
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
2. An endowed scholarship is one funded by a single deposit in a permanent scholarship account by a successful alum. The endowment deposit amount remains untouched and unchanged in the scholarship account. The interest accumulated each year is taken out and paid to a deserving student at the end of each year in a scholarship award. If an endowment earns 3.25% annual interest compounded monthly, a. What is the effective interest rate? b. What would the annual scholarship award be if the amount of the endowment was $300,000?

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