Today's dollars, assuming of 3 percent? Rachael is applying for a scholarship currentlyvalued at $5,000. If she is awarded it at the endof next year, how much is the scholarship worthin today's dollars, assuming of 3 percent?

To calculate the present value (PV) of the scholarship, we use the Present Value…

Answered: Rachael is applying for a scholarship…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Emma wants to donate $1,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of j4=5% p.a. effective and the first scholarship will be first awarded 2.5 years after the date of the donation. (a) What is the amount of the annual scholarship (rounded to two decimal places)?
Emma wants to donate $1,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of j4=4.12% p.a. effective and the first scholarship will be first awarded 2.5 years after the date of the donation. (a) What is the amount of the annual scholarship (rounded to two decimal places)? (b) Assume that the fund's earnings rate rate has changed from j4=4.12% to j4 = 3.87% one year before the first scholarship payment. How much does Emma need to add to the fund at that time (one year before the first scholarship payment) to ensure that scholarship amount will be unchanged (rounded to two decimal places)? (a) What is the amount of the annual scholarship (rounded to two decimal places)? a. 44494.20 b. 46355.87 C. 41840.92 d. 43772.21 (b) Assume that the fund's earnings rate rate has changed from 4-4.12% to 4-3.87% one year before the first scholarship payment. How much does Emma need to add to the fund at that time (one year before the first…
Brenda Young desires to have $16,500 eight years from now for her daughter’s college fund. If she will earn 12 percent (compounded annually) on her money, what amount should she deposit now?
Mary Cooper, Sheldon's mother, who lives in east Texas, wants to help pay for her grandchild's education. How long will it take Mary to reach her goal of $295,000 if she invests $10,000 per year, earning 6 percent? Use Appendix A-3 or the Garman/Forgue companion website. Round your answer to the nearest half-year. years
Annalise will deposit into her investment account $4,500, $1,000, and $5,500 at the end of Years 1, 2, and 3, respectively. What will her account be worth at the end of the Year 3 if she earns an annual rate of 6.15 percent? O $11,632.02 O $10,381.25 O $9,725.12 O $11,526.50 None of these answers are correct
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Palma wants to establish a fund for her granddaughter's college education. What lump sum must she deposit in an account that pays an annual interest rate of 6%, compounded monthly, if she wants to have $10,000 in 10 years?
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Gabrielle just won $2.7 million in the state lottery. She is given the option of receiving a of $1,200,000 now, or she can elect to receive $90,000 at the end of each of the next 30 years. If Gabrielle can earn 5% annually on her investments, which option should she take? If Gabrielle takes the prize as an annuity, the present value of the 30-year ordinary annuity is? Can you do it in an excel format?
e She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. c. She If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Problem 5 EVALUATING LUMP SUMS AND ANNUITIES. Crissie just won the lottery, and she must choose between three award options. She can elect to receive a lump sum today of $61 million, to receive 10 end-of-year payments of $9.5 million, or to receive 30 end-of-year payments of $5.5 million. a. If she thinks she can earn 7% annually, which should she choose? b. If she expects to earn 8% annually, which is the best choice? c. If she expects to earn 9% annually, which option would you recommend? d. Explain how interest rates influence the optimal choice. Problem 6 PV OF A CASH FLOW STREAM. A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 10%. He has been offered three possible 4-year contracts. Payments…

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Rachael is applying for a scholarship currently valued at $5,000. If she is awarded it at the end of next year, how much is the scholarship worth in today's dollars, assuming of 3 percent?