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In: Finance

When Alfred Nobel​ died, he left the majority of his estate to fund five​ prizes, each...

When Alfred Nobel​ died, he left the majority of his estate to fund five​ prizes, each to be awarded annually in perpetuity starting one year after he died.​ (The sixth​ one, in​ economics, was added​ later.)

a. If he wanted the cash award of each of the five prizes to be

​$35 comma 000

and his estate could earn

88​%

per​ year, how much would he need to fund his​ prizes?

b. If he wanted the value of each prize to grow by

44​%

per year​ (perhaps to keep up with​ inflation), how much would he need to​ leave? Assume that the first amount was still

​$35 comma 000.

c. His heirs were surprised by his will and fought it. If they had been able to keep the amount of money you calculated in b and had invested it at

88​%

per​ year, how much would they have in

20152

119

years after he​ died

Solutions

Expert Solution

I AM NOT ABLE TO READ LAST PART AS ALL DIGITS ARE TOGETHER : IT IS "119" YEARS. AM I RIGHT. IF NOT LET ME KNOW, WILL CORRECT IT. THANK YOU

jeff jeffy answered 1 hour ago
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