Say that you want to establish a scholarship fund that will make fixed payments forever. To fund thescholarship, you plan to make 12 annual contributions of $9.9k to an investment account with an expectedreturn of 6.0% interest annually. Your first contribution occurs today. If the scholarship fund makes its firstpayment two years following the last contribution, then what is the fixed annual payment that thescholarship fund will award? (Round to the nearest dollar)

This is case of future value of annuity due. In annuity due equal periodic payments are made at the…

Answered: Say that you want to establish a…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 23E

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You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
You will endow a DePaul scholarship with a grant gift stream that lasts forever. The first grant is to be made 10 years from now in the amount of $1,303.14, but it must grow by 3% per year forever. Assume a discount rate of 9% and annual compounding. How much must you set aside today to fund the gift?
Jami Minard wants to receive an annuity of $5,000 at the beginning of each year for the next 10 years. How much (in $) should be deposited now at 7% compounded annually to accomplish this goal? (Round your answer to the nearest cent.)
Aetna is offering customers who invest $10,000 with them today a payment of $1,500 every 1.5 years in perpetuity. If the first payment will be made 1.5 years from today, what is the effective annual rate (EAR) of this investment opportunity?
You have $500,000 to donate to your college. The college's discount rate is 7%. You donate the money today, but you ask the college to delay the scholarship payment so that the first scholarship payment is made 10 years from today. How large will the annual payment be? The annual scholarship payment will be $ (Round to the nearest cent.)
To supplement your planned retirement in exactly 42 years, you estimate that you need to accumulate $220,000 by the end of 42 years from today. You plan to make equal annual end-of-year deposits into an account paying 8 percent annual interest.a. How large must the annual deposits be to create the $220,000 fund by the end of 42 years?b. If you can afford to deposit only $600 per year into the account, how much will you have accumulated by the end of the forty-second year?
You intend to endow a scholarship that pays $5,000 every 6 months, starting 6 months from now. If the appropriate discount rate is 3% per 6-month period, how much money will you have to donate ← today to endow the scholarship? You will need to donate $ (Round to the nearest dollar.) CIT
We are funding an organization for ten years. The first payment will be made one year from today (end of year one) and will be $8,350. Each year after that, the organization will receive payment from us annually. The payment will increase at a rate of 2% per year after the second payment. If the annual interest rate is 15%, what is the present value of this endowment?
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If a donation of $100,000 is expected to pay out scholarships of $10,000 every year and the funds earn 7.5% compounded annually, how long will it be before the first annual payment can be made?
.You want to start a scholarship fund at your alma mater with giving one $10,000 scholarship annually beginning one year from now. And you have at most $150,000 to start the fund. You also want the scholarship to be given out indefinitely. Assuming an annual interest rate of 8% (compounded continuously , do you have enough money for the scholarship fund? 15%4 (Hint: 1. Derive the formula of the present value of a perpetuity .2. Find the present value.)
Jami Minard wants to receive an annuity of $8,000 at the beginning of each year for the next 10 years. How much (in $) should be deposited now at 7% compounded annually to accomplish this goal?

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