Sam wants to donate $1,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fundwill earn an interest rate of j4-3.81% p.a. effective and the first scholarship will be first awarded 2.5 years afterthe date of the donation.(b) Assume that the fund's earnings rate rate has changed from 4-3.81% p.a. to j4-3.56% p.a. one year beforethe first scholarship payment. How much does Sam need to add to the fund at that time (one year before thefirst scholarship payment) to ensure that scholarship amount will be unchanged (rounded to two decimalplaces)?Question 9Answera.78309.64b.74276.05C.71226.96d.75395.75

Here, Donation Amount $ 1,000,000.00Interest Rate3.81%Time Period of ScholarshipPerptuityTime…

Answered: Sam wants to donate $1,000,000 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

2. Trixy needs to accumulate 780,000.00 for her insurance investment for 5 years. She set up a sinking fund for the said amount that earns 7.5 % interest compounded semi-annually. Construct a sinking fund schedule for her investment.
How much can be paid in scholarship at the beginning of each month if $231,500 is deposited in a trust fund if interest is 5.6% compounded monthly?
Don Jose deposited ₱5,000,000 on a bank that earns 10% compounded annually. Five years later he died. His will states that his beneficiary is an orphanage which will be receiving the money in perpetuity a year after he died. How much is the yearly fund the orphanage will be receiving?
Bradley set up a fund that would pay his family 3500 at the beginning of every month, in perpetuity.What was size of the investment in the fund if it was earning 5.50% compounded semi-annually?
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 4.57% p.a. compounded half-yearly (j2=4.57% p.a.) and the first scholarship will be first awarded 3.5 years after the date of the donation. (a) What is the amount of the annual scholarship (rounded to two decimal places)? Question 9 Answer a. 127913.37 b. 255507.69 c. 260410.57 d. 258749.57 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 4.57% p.a. compounded half-yearly (j2=4.57% p.a.) and the first scholarship will be first awarded 3.5 years after the date of the donation. (b) Assume that two years after the donation, Mike needs to withdraw $1,000,000 from the fund and use the remaining amount to provide an annual scholarship in perpetuity. The time of the first scholarship will be unchanged (3.5 years after the date of the donation). What is the new annual…
On Sarah’s 18th birthday, she creates a trust fund to pay her a sequence of nine semiannual payments of 15,000; the first is due on her 23rd birthday. If the fund earns 6.5% compounded semiannually, find the present value of the deferred annuity.
An inheritance of $120,000 is invested in a fund that earns 7.7% compounded semiannually. If this amount is deferred for 14 years, how much will it provide at the end of each half-year for the next 20 years? Clearly state the result.
To create a college fund, a parent makes a sequence of 20 yearly deposits of $4000 each year in a saving account, on which interest is compounded annually at 2.8%. Find the amount of annuity.
Bill makes deposits of 2,700 at the end of each year for n years into a fund. At time n, he uses the accumulated value of the fund to purchase an annuity immediate that makes payments of 197,909.20 at the end of each year for 5 years. The annual effective interest rate is 15%. Calculate n. O a. 26 O b. 29 O c. 28 O d. 24 O e. 22
(Please give the detailed solution,thank you) On the day his grandson was born, a man deposited to a trust company a sufficient amount of money so that the boy could receive five annual payments of P10,000 each for his college tuition fees, starting on his 18th birthday. Interest rate of 13.6% per annum was to be paid on all amounts on deposit. There was also a provision that the grandson could elect to withdraw no annual payments and receive a single lump sum amount on his 25th birthday. The grandson chose this option. 1. How much did the boy receive as the single payment? 2. How much did the grandfather deposit?
Mike wants to donate S5, 000, 000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of 5.37% p.a. compounded half-yearly (j2 = 5.37% p.a.) and the first scholarship will be first awarded 3.5 years after the date of the donation. (a) What is the amount of the annual scholarship (rounded to two decimal places) ? Question 9 Answer a. 313037.32 b 306010.79 с. 153267.24 d. 310649.70
George Jefferson established a trust fund that provides $172, 500 in scholarships each year for worthy students. The trust fund earns a 3 percent rate of return. How much money did Mr. Jefferson contribute to the fund assuming that only the interest income is distributed?

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