The endowment will be created by making a single payment

Assignment Help Financial Management

Reference no: EM131192498

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 $ 1,100 per student.

The endowment will be created by making a single payment to the university. The university expects to earn exactly 5% per year on these funds.

A) How large an initial single payment must? Marla's parents make to the university to fund the? endowment?

B) What amount would be needed to fund the endowment if the university could earn 8% rather than 5% per year on the funds?

Reference no: EM131192498

Questions Cloud

Calculate the net sales needed to produce net income : Listed below is the 2015 income statement for Tom and Sue Travels, Inc. TOM AND SUE TRAVELS, INC. Income Statement for Year Ending December 31, 2015 (in millions of dollars) Net sales $ 19.000 Less: Calculate the net sales needed to produce net incom..

Calculate the? annual, end-of-year loan payment : Joan Messineo borrowed $ 18,000 at a 12% annual rate of interest to be repaid over 3 years. The loan is amortized into three? equal, annual,? end-of-year payments. Calculate the? annual, end-of-year loan payment. Prepare a loan amortization schedule ..

Decided to endow your favorite university with scholarship : You have decided to endow your favorite university with a scholarship. It is expected to cost $ 4,000 per year to attend the university into perpetuity. How large must the endowment? be? How much must you deposit at the end of each of the next 11 yea..

Explain how trade balance-interest rates and exchange rate : Explain how trade balance, interest rates, and exchange rates are related, and cite an example of how a rise or fall in one changes the others. Does a deficit in China or the US change the overall adavantage or disadvantage of trade? Why? Explore how..

The endowment will be created by making a single payment : 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..

The sarbanes-oxley act : The Sarbanes-Oxley Act of 2002 holds all of the following groups strictly accountable in a legal sense for any instances of misconduct EXCEPT.

Determine the underapplied manufacturing overhead : Applied vs. Actual Manufacturing Overhead Davis Manufacturing Corporation applies manufac- turing overhead on the basis of 150% of direct labor cost. Determine the underapplied manufacturing overhead at year-end (assume it is significant). Prepare a ..

What is the present value of entire business venture : Fred Nickerson, gold digger, plans to build a mining operation on his farm. The initial investment will be $100,000 and each year Fred expects to pay $5,000 to maintain the equipment. What is the present value of Fred’s entire business venture, assum..

What earnings rate would you be indifferent in two plans : Assume that you just won the lottery. Your prize can be taken either in the form of $ 80,000 at the ned of the next 20 years (1,600,000 over 20 years) or as a single amonut if $ 687,000 paid immediatly. If you expect to be able to earn 4% annually on..

User Account

All Pages