Question Five A woman wants to provide a $3,000 university scholarship every year for ten years. The first scholarship is to be awarded one year from now. If the university can earn a 4% p.a. compounded monthly as a return on their investments, how much should the woman give now? To determine the amount the woman must invest now, simply use the present value of an ordinary annuity formula, bearing in mind that the interest rate is compounded monthly. r = (1+0.0412-1 12 = 0.04074 = 4.074% 1-(1.04074) -10 PV=$3,000 = $24,243.12 0.04074

Question Five A woman wants to provide a $3,000 university scholarship every year for ten years. The first scholarship is to be awarded one year from now. If the university can earn a 4% p.a. compounded monthly as a return on their investments, how much should the woman give now? To determine the amount the woman must invest now, simply use the present value of an ordinary annuity formula, bearing in mind that the interest rate is compounded monthly. r = (1+0.0412-1 12 = 0.04074 = 4.074% 1-(1.04074) -10 PV=$3,000 = $24,243.12 0.04074

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter4: Managing Your Cash And Savings

Section: Chapter Questions

Problem 7FPE: Calculating interest earned and future value of savings account. If you put 6,000 in a savings...

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