Question

In: Economics

A generous university benefactor has agreed to donate a large amount of money for student scholarships....

A generous university benefactor has agreed to donate a large amount of money for student scholarships. The money can be provided in one lump sum of $12 million in Year 0 (the current year), or in parts, in which $7 million can be provided at the end of Year 1, and another $7 million can be provided at the end of Year 2.

Describe your answer for each item below in complete sentences, whenever it is necessary. Show all of your calculations and processes for the following points:

Assuming the opportunity interest rate is 8%, what is the present value of the second alternative mentioned above?

Which of the two alternatives should be chosen and why?

How would your decision change if the opportunity interest rate is 12%?

Provide a description of a scenario where this kind of decision between two types of payment streams applies in the “real-world” business setting.

Solutions

Expert Solution

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

The student council is hosting a drawing to raise money for scholarships. They are selling tickets...
The student council is hosting a drawing to raise money for scholarships. They are selling tickets for $9 each and will sell 800 tickets. There is one $3,000 grand prize, three $400 second prizes, and twelve $20 third prizes. You just bought a ticket. Find the expected value for your profit. Round to the nearest cent. $
The student council is hosting a drawing to raise money for scholarships. They are selling tickets...
The student council is hosting a drawing to raise money for scholarships. They are selling tickets for $6 each and will sell 500 tickets. There is one $2,000 grand prize, four $300 second prizes, and fifteen $40 third prizes. You just bought a ticket. Find the expected value for your profit. Round to the nearest cent.
The student council is hosting a drawing to raise money for scholarships. They are selling tickets...
The student council is hosting a drawing to raise money for scholarships. They are selling tickets for $9 each and will sell 800 tickets. There is one $3,000 grand prize, two $400 second prizes, and fourteen $20 third prizes. You just bought a ticket. Find the expected value for your profit. Round to the nearest cent.
Does the average Presbyterian donate a different amount of money compared to the average Catholic in...
Does the average Presbyterian donate a different amount of money compared to the average Catholic in church on Sundays? The 41 randomly observed members of the Presbyterian church donated an average of $21 with a standard deviation of $5. The 44 randomly observed members of the Catholic church donated an average of $16 with a standard deviation of $10. What can be concluded at the α = 0.05 level of significance? For this study, we should use The null and...
Does the average Presbyterian donate a different amount of money compared to the average Catholic in...
Does the average Presbyterian donate a different amount of money compared to the average Catholic in church on Sundays? The 49 randomly observed members of the Presbyterian church donated an average of $28 with a standard deviation of $12. The 51 randomly observed members of the Catholic church donated an average of $26 with a standard deviation of $10. What can be concluded at the αα = 0.05 level of significance? For this study, we should use Select an answer...
If Desmond originally planned to donate $250,000 to the university today, what equivalent amount could he...
If Desmond originally planned to donate $250,000 to the university today, what equivalent amount could he donate at the end of 10 years from now instead? Assume his interest rate is still 7% per year, compounded annually.
Consider randomly selecting a student at a large university, and let "A" be the event that...
Consider randomly selecting a student at a large university, and let "A" be the event that the selected student has a Visa card and "B" be the analogous event for MasterCard. Suppose that P(A)=0.6 and P(B)=0.4. a) Could it be the case that P(A and B)=0.5? Why or why not?
at a large University the graduation rate for the general student body was reported to be...
at a large University the graduation rate for the general student body was reported to be 0.66 we want to compare the center spread and shape of the distribution of sample proportion graduating from random samples of five students compared to the distribution and random samples of 50 students what is the center of the distribution for samples of size 5 round the answer to two decimal places
Consider randomly selecting a student at a large university, and let A be the event that...
Consider randomly selecting a student at a large university, and let A be the event that the selected student has a Visa card and B be the analogous event for MasterCard. Suppose thatP(A) = 0.7and P(B) = 0.3. (a)Could it be the case thatP(A ∩ B) = 0.5? Why or why not? (b) From now on, suppose thatP(A ∩ B) = 0.2. What is the probability that the selected student has at least one of these two types of cards?...
Consider randomly selecting a student at a large university. Let A be the event that the...
Consider randomly selecting a student at a large university. Let A be the event that the selected student has a Visa card, let B be the analogous event for MasterCard, and let C be the event that the selected student has an American Express card. Suppose that P(A) = 0.6,P(B) = 0.4,and P(A ∩ B) = 0.3,suppose that P(C) = 0.2,P(A ∩ C) = 0.12,P(B ∩ C) = 0.1, and P(A ∩ B ∩ C) = 0.08. a)What is the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT