Myra Cairns recently retired from her position as Professor of English at Swan University in Western Australia. She wants to set up a perpetual fund which will support a travelling scholarship for PhDstudents in English and has asked you for assistance. Myra would like the fund to pay scholarship winners $15,000 each to enable them to travel either to the UK or the US. A scholarship will beawarded every third year, beginning in two years' time. Myra has been advised that a rate of return of 5% pa is a realistic expectation. The amount Myra needs to set up the fund is closest to: (A) $86,315 (B) $90, 909 (C) $99,921 (D) $104, 545

Periodical payment: $15,000Interest rate (r): 5%Time gap between each payment (n): 3

Answered: Myra Cairns recently retired from her…

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

Your grandfather wants to establish a scholarship in his father’s name at a local university and has stipulated that you will administer it. As you’ve committed to fund a $25,000 scholarship every year beginning one year from tomorrow, you’ll want to set aside the money for the scholarship immediately. At tomorrow’s meeting with your grandfather and the bank’s representative, How much will need to deposit? rounded to the nearest whole dollar) so that you can fund the scholarship forever, assuming that the account will earn 5.50% per annum every year. The bank representative just reported that he misquoted the available interest rate on the scholarship’s account. Your account should earn 3.50%. The amount of your required deposit should be revised to?
Granny Gums has established a scholarship at the Martin College of Dentistry. She will make deposits into an endowment account that pays 12% per year based on the following schedule.If the first scholarship is to be awarded 1 year after the first deposit is made and thereafter the award will be given indefinitely, what is the scholarship amount?
An Alumna of Eastern Mediterranean University wanted to set up an endowment fund that would award scholarships to female engineering students totaling $ 150000 per year forever. The first scholarships are to be granted now and continue each year forever. How much must the alumna donate now? If the ROR is 10 % per year.
Your grandfather wants to establish a scholarship in his father's name at a local university and has stipulated that you will administer it. As you've committed to fund a $15,000 scholarship every year beginning one year from tomorrow, you'll want to set aside the money for the scholarship immediately. At tomorrow's meeting with your grandfather and the bank's representative, you will need to deposit (rounded to the nearest whole dollar) so that you can fund the scholarship forever, assuming that the account will earn 4.50% per annum every year. Oops! The bank representative just reported that he misquoted the available interest rate on the scholarship's account. Your account should earn 7.00%. The amount of your required deposit should be revised to relationship between the interest rate earned on the account and the present value of the perpetuity. This suggests there is
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? Please do not give solution and formulae in image format.. thanku
A University is offering a charitable gift program. A former student who is now 50 years old is consider the following offer: The student can invest $9,300.00 today and then will be paid a 8.00% APR return starting on his 65th birthday (i.e For a $10,000 investment, a 9% rate would mean $900 per year). The program will pay the cash flow for this investment while you are still alive. You anticipate living 22.00 more years after your 65th birthday. The former student wants a return of 6.00% on his investments, but would like to consider this opportunity. What is the annual cash flow from the investment starting on the student's 65th birthday?
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
As a future graduate of the University of Minnesota, someday you would like to endow a scholarship (meaning give the university money in your name) to pay for tuition expenses for future UMN students. Assume you just graduated (congratulations!). You plan to work for fifteen years after graduation before endowing this scholarship (at the end of the fifteenth year AFTER graduation). Annual tuition at UMN is $10,000 today, and is expected to grow at the long-term average rate of inflation of 3% per year forever. Savings are expected to earn a return of 7% per year forever. a) The first tuition payment is due one year after the scholarship is endowed. How much will the tuition be when your scholarship makes the first payment? b) You would like the scholarship to pay all tuition for one student per year for the twenty years following the creation of the endowment, how much money do you need to endow the scholarship? c)If you would like the scholarship to pay for tuition for one student…
Your daughter is expected to the university next year. It is estimated that she will need 10,000 each year for the for years university education. You are planning to deposit a lump sum in an account that will yield 10% per anum to cater for her university education. How much should be deposited?
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?
Please answer the following questions recording your answer beside the letter identifying the question. Answers: A. В. C. D. Questions: Mr. and Mrs. Smith plan to have their daughter's college education fully funded at the end of 18 years from today. They plan to invest annually at the end of each year to reach the desired dollar amount. The Smith's estimate that they will earn 6% on all invested monies during the 18 years. The cost of college today is $30,000 annually and is expected to increase by 3% annually over each of the next 18 years. Part A- What is the expected cost of one year of college 18 years from today? Write this value beside letter A above. Part B - Begin by multiplying your answer in Part A by 4 to approximate the cost of four years of college. How much will the Smith's need to invest at the end of each year for the next 18 years to reach what you approximate the cost of four years of college to be? Write this value beside letter B above. Part C- The Smiths will each…
Your grandfather wants to establish a scholarship in his father’s name at a local university and has stipulated that you will administer it. As you’ve committed to fund a $15,000 scholarship every year beginning one year from tomorrow, you’ll want to set aside the money for the scholarship immediately. At tomorrow’s meeting with your grandfather and the bank’s representative, you will need to deposit ___________ (rounded to the nearest whole dollar) so that you can fund the scholarship forever, assuming that the account will earn 4.50% per annum every year. Oops! The bank representative just reported that he misquoted the available interest rate on the scholarship’s account. Your account should earn 7.00%. The amount of your required deposit should be revised to____________. This suggests there is (an inverse / a direct) relationship between the interest rate earned on the account and the present value of the perpetuity.

SEE MORE QUESTIONS

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

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