Make to the university to fund the endowment

Assignment Help Financial Management

Reference no: EM131300208

On completion of her introductory finance? course, Marla Lee was so pleased with the amount of useful and interesting knowledge she gained that she convinced her? parents, who were wealthy alums of the university she was? attending, to create an endowment. The endowment is to allow three needy students to take the introductory finance course each year in perpetuity. The guaranteed annual cost of tuition and books for the course is $1,400 per student. The endowment will be created by making a single payment to the university. The university expects to earn exactly 6% per year on these funds.

a) The initial single payment must? Marla's parents make to the university to fund the endowment is ? Round to nearest dollar

b) What amount would be needed to fund the endowment if the university could earn 9% rather than 6% per year on the? funds?

Reference no: EM131300208

Questions Cloud

Calculate the expected value of? return : An asset is currently being considered by Perth Industries. Calculate the expected value of? return, r for the asset. Calculate the standard? deviation,sigma Subscript rσr?, for the? asset's returns. Calculate the coefficient of? variation, CV for th..

Calculate the semi-annual coupon payment : Lintron Inc issued corporate bonds to finance the purchase of a new plasma die cutting machine. The bonds are currently selling for $1035.50 and have 8 years remaining until maturity. The market interest rate is 5.4% annually. Calculate the semi-annu..

Project create in present value terms : TeleStark is considering building a new manufacturing plant. This plant will cost $9 million to build. The new plant will produce cash inflows of $2.05 million per year for the next 7 years. TeleStark already owns the land on which it intends to buil..

What is the annual dollar amount of interest : Assume that three years ago you purchased a corporate bond that pays 8.5 percent. The purchase price was $1070. What is the annual dollar amount of interest that you receive from your bond investment?

Make to the university to fund the endowment : On completion of her introductory finance? course, Marla Lee was so pleased with the amount of useful and interesting knowledge she gained that she convinced her? parents, who were wealthy alums of the university she was? attending, to create an endo..

Calculate the coefficient of variation for each project : Which project is least? risky, judging on the basis of range? Calculate the coefficient of variation for each project. Which project do you think? Greengage's owners should? choose?

Draw the cash flow diagram : A software engineer planning for his retirement will deposit 12% of his salary each year into a high technology stock fund. If his salary this year is S 120,000 and he expects his salary to increase 5% each year, how much will he have in the fund aft..

What is required rate of return on equity for each company : North Pole Fishing Equipment and South Pole Fishing Equipment would have identical equity betas of 1.25 if both were all equity financed. What is the equity beta of each of the two companies? What is the required rate of return on equity for each co..

What is the adjusted present value of the project : Zulu Car Rental Corporation is trying to determine whether to add 25 cars to its fleet. The company fully depreciates all its rental cars over 5 years using the straight line method. The new cars are expected to generate $140,000 per year in earnings..

User Account

All Pages