Betty Lovelace wants to set up a fund which will
provide in perpetuity a scholarship of...
Betty Lovelace wants to set up a fund which will
provide in perpetuity a scholarship of $2,600 to a deserving
student at the end of each year with the first payment being made
one year from today . Find the amount Betty should deposit today
into the fund to provide for this scholarship if the interest rate
is 3.8% compounded quarterly
Solutions
Expert Solution
Effective annual rate = (1+Quarterly rate)^Number of periods per
year - 1
= (1+3.8%/4)^4 - 1
= 3.8545%
Amount of fund required = Annual Payment/Interest rate
Samantha wants to set up a fund which will provide in perpetuity
a scholarship of $2,600
to a deserving student at the end of each year with the first
payment being made one year
from today . Find the amount Betty should deposit today into the
fund to provide for this
scholarship if the interest rate is 3.8% compounded
quarterly.
Sydney will fund a scholarship that will provide payments of
$25,000 per year in perpetuity, with the first scholarship payment
to be paid 20 years from today. She is considering two options:
Option A: Pay $22,974,73 at the beginning of each year for the
next 20 years.
Option B: Pay $K per year at the end of the year for the next 5
years.
The effective annual interest rate is constant and the present
value of option A is equal...
1. April wants to create a scholarship fund by saving for
several years before the fund starts making annual scholarship
payments forever. She plans to save 10,800 dollars per year for 5
years. Her first savings contribution is expected later today. How
much can the fund be expected to provide each year for scholarships
if the fund is expected to earn 4.67 percent per year, make equal
scholarship payments forever, and make its first scholarship
payment in 6 years?
a. Pasuman is establishing an endowment fund to finance a
scholarship scheme to provide funding for the education of her
children. She plans to make an initial deposit of GH¢1,000,000 into
the fund now. The initial deposit will be invested for five years
before any disbursements will be
made from the fund. The effective annual rate of return on the
fund is expected to be 14% in the first and second year, 15% in the
third and forth year, and...
Lionel wants to set up a fund for his son's education such that
he could withdraw $1,295.00 at the beginning of every 3 months for
the next 6 years. If the fund can earn 3.30% compounded
semi-annually, what amount could he deposit today to provide the
payment?
Problem 12.
(a) Cersei wants to set up a college fund for her son
Tommen. Investments deposited at the Iron Bank of Braavos earn 8%
interest per year, compounded quarterly. If Cersei invests $7000
with the Iron Bank of Braavos, how long will it take her investment
to be worth $126 000?
(b) Cersei also take out a $212 000 mortgage to buy a home in
King’s Landing, amortizing it over 30 years at 5.5%, compounded
monthly.
(a) What are...
If Lisa Hamilton wants to fund a scholarship that would pay
$12,500 per year forever at GSU, how much would Lisa have to
deposit today if she wanted the scholarship to start paying six (6)
years from today? Assume the endowment could earn 6.25% p.a.
interest forever.
Problem 12. Show your work!
(a) Cersei wants to set up a college fund for her son
Tommen. Investments deposited at the Iron Bank of Braavos earn 8%
interest per year, compounded quarterly. If Cersei invests $7000
with the Iron Bank of Braavos, how long will it take her investment
to be worth $126 000?
(b) Cersei also take out a $212 000 mortgage to buy a home in
King’s Landing, amortizing it over 30 years at 5.5%, compounded
monthly....
You set up a college fund in which you pay $3500 each year at
the beginning of the year. How much money (in $) will you have
accumulated in the fund after 29 years, if your fund earns 7%
compounded annually?
You set up a college fund in which you pay $5000 each year at
the beginning of the year. How much money (in $) will you have
accumulated in the fund after 24 years, if your fund earns 9%
compounded annually?