Morphosis Pty(Ltd) is an investment bank that plans to offer a bursary in five years time to one top-performing third-year finance student at UCT. The bank plans to fund one student each year and is offering R60000 per student. The bursary will only be offered for six years and will therefore cease thereafter. How much should Morphosis Pty(Ltd) save each year from today in order to successfully implement the bursary in five years? Assume the bank plans to invest in a diversified mutual fund that will earn 12% p.a. on average.

Morphosis Pty(Ltd) is an investment bank that plans to offer a bursary in five years time to one top-performing third-year finance student at UCT. The bank plans to fund one student each year and is offering R60000 per student. The bursary will only be offered for six years and will therefore cease thereafter. How much should Morphosis Pty(Ltd) save each year from today in order to successfully implement the bursary in five years? Assume the bank plans to invest in a diversified mutual fund that will earn 12% p.a. on average.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 22P

See similar textbooks

Similar questions

One university needs some maintenance. The owner of the university decides to deposit $400000 in an account next year, and estimated to increase the deposits by $50000 per year for five years thereafter, then cease. If the rate of interest is 10% what is the present worth?* NON
You plan to make a lump-sum deposit of $5000 now into an investment account that pays 6% per year, and you plan to withdraw an equal end-of-year amount of $1000 for 5 years, starting next year. At the end of the sixth year, you plan to close your account by withdrawing the re- maining money. Define the engineering economy symbols involved.
Listen The Chan family would like to establish a bursary at Camosun College. The bursary will pay $2,000 to a deserving finance student each year. Assuming that the payments will never end and that the funds can earn j1=3.5%, how much will it take to establish the bursary? Assume that the payments are at the end of each year. Your Answer:
A person wants to have (5000 CU) pay for his education at the end of each year for (6 years). If the bank rate of interest is (11.5%), how much money has to be deposit at present. Q2:A company invests in one of three alternatives, the life of all alternatives is estimated to be (5 years) with the following investments, annual returns, and salvage value: Alternatives 3 200000 CU 70000 CU 50000 CU Details Alternatives 1 Alternatives 2 Investment 150000 CU 175000 CU Annual equal return 60000 CU 70000 CU 15000 CU 25000 CU Salvage value Determine the best alternative based on Net Present Worth Comparison (NPW) by assuming i=10%.
You received a gift of $50 000 when you graduated with a first class honours degree last year. You are considering investing this amount for a year and are considering choosing one of the following banks: Commonwealth Bank is offering 16 percent per year compounded monthly while National Australia Bank is offering 15.6% per year compounded annually, and Bank of Melbourne is offering 15.4% per year but compounded semi-annually. Which bank should you approach to invest your money? Perform some calculations to inform your decision. Effective annual rate: bold italicE bold italic A bold italic Requals open parentheses 1 plus bold italic rover bold italic m close parentheses to the power of bold italic m minus 1 For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). I o Ō 8 Q ... BIUS Paragraph Arial 10pt Clase Wirdow Save All Answers sove dil dnSver W clicksav E MBA661 Gendere.pdf Show all O Type here to search 26°C Rain showers 256 PM 9/7/2021 SonidM 15 f10 f11 f12 pause break pt so…
M6
An investor pays ₱1,100,000 for a mine which will yield a net income of ₱200,000 at the end of each year for 10 years and then will become useless. He accumulates a replacement fund at 4.5%. At what rate (%) does he receive interest on his investment at the end of each year? ANSWER WITH COMPLETE SOLUTION
A chemical engineer wants to deposit an amount now such that she can withdraw an equal annual amount of S3000 per vear for the first 5 vears, starting 1 year after the deposit, and a different annual withdrawal of $2000 per year for the following 3 years. How would the cash flow diagram appear if the account earns rate of interest of 8.59% per year. Determine the amount of initial deposit made by the engineer after writing the initial set up equation for the cash flow. What is the present worth of equal annual amounts deposited for the first five years based on your calculations
Wholesome A new Wholesome restaurant can be opened in Cape Town. This will however require funds, which Feast does not have available internally. To bridge this, Feast has identified a savings fund into which equal semi-annual payments can be made for 2 years. The saving fund offers an interest rate of 8.9% compounded monthly. After the 2-year period, the payments into the fund will seize, however, the accumulated funds will be kept in the savings fund for a further year and six months period in order to receive further interest. Once this time has lapsed, 3 annual payments of R1 036 400 will be made to Feast from the saving fund at the start of each period. All funds required by Feast’s restaurants are obtained from Feast’s general pool of funds Refer to Wholesome. Assist Feast Ltd in calculating the value of the payments to be made into the savings fund
Suppose that you have $1,000,000 available for investment for a period of four years. After investigating the local banks, you have compiled the following table for comparison. Bank Interest Rate Compounding Scotia Bank 10% Annually National Commercial Bank 9% Semi-annually First Caribbean International Bank 6.8% Quarterly Using the Future Value concept (based on calculation), in which bank should you deposit your funds to maximize return and why?
The Business Manager of a Commercial Laboratory needs to determine the present value of a $170,000 investment received at the end of year 7. What is the present value of the investment if the discount rate is 6%?
1. Devise a solid plan to convince college graduate seniors to go for Php3,000 monthly savings 20-year annuity program rather than a one-time saving placement of Php500,000 left for 20 years. The interest rate is pegged at 12% per annum