Sinking Fund Mr. and Mrs. Smith need $80,000 for their daughter's education in a private university after six years. They invested in a sinking fund that earns 7% compounded annually for the initial four years and the fund pays 8% compounded annually for the remaining years. Due to the higher interest rate, Mr. and Mrs. Smith decrease their remaining payments. Find the amount of the new payment. Round your answer to the nearest dollar. the answer is 10, 617

Sinking Fund Mr. and Mrs. Smith need $80,000 for their daughter's education in a private university after six years. They invested in a sinking fund that earns 7% compounded annually for the initial four years and the fund pays 8% compounded annually for the remaining years. Due to the higher interest rate, Mr. and Mrs. Smith decrease their remaining payments. Find the amount of the new payment. Round your answer to the nearest dollar. the answer is 10, 617

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

See similar textbooks

Similar questions

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 $1,000,000 from the fund and use the remaining amount to provide an annual scholarship in perpetuity. The time of the first scholarship will be unchanged (3.5 years after the date of the donation). What is the new annual…
A father has saved money in a fund to finance his son's 4-year university program. The fund pays out 300$ every month at the beginning of each month for 8 months (September through April) plus an extra 2.000$ each September 1st for 4 years. At j4 = 8%, what is the value of the fund on the first day of university, before any withdrawals?
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
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.
A wealthy graduate of a local university wants to establish a scholarship to cover the full cost of one student each year in perpetuity at her university. To adequately prepare for the administration of the scholarship, the university will begin awarding it starting in three years. The estimated full cost of one student this year is $32,000 and is expected to stay constant in real terms in the future. If the scholarship is invested to earn an annual real return of 10 percent, how much must the donor contribute today to fully fund the scholarship? Note: Negative value should be indicated by a parenthesis. > Answer is complete but not entirely correct. $(240,421) X Contribution
A wealthy graduate of a local university wants to establish a scholarship to cover the full cost of one student each year in perpetuity at her university. To adequately prepare for the administration of the scholarship, the university will begin awarding it starting in three years. The estimated full cost of one student this year is $38,000 and is expected to stay constant in real terms in the future. If the scholarship is invested to earn an annual real return of 5 percent, how much must the donor contribute today to fully fund the scholarship?
1. General Annuity. your grandparents are planning to save for their retirement. They target to accumulate 10,000,000 in 10 years. to do this they want to set aside a portion of their salaries and contribute monthly for their retirement funds. How much should they contribute per month if they will have a chance to onvest in an annuity that earns 5% compounded quarterly? 2. Mr. david oscar joined their office cooperative and agreed to contribute 2,000 per month beggining in january 2019 Which will earn 3% compounded monthly. How much will be the future value of your mom's contribution at the end of april 2020/
Jeff wishes to accumulate $7,000 in 6 years. Use the appropriate formula to find the sinking fund payment she would need to make at the end of each year, at 7% interest, compounded annually. $942.12 $978.57 O $1,432.12 O $1,468.57
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?

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS