Calculate the size of the endowment

Reference no: EM13202473

junstin.Ting Corporation wants to establish a scholarship in the company's name at a university. The firm wants the scholarship to provide a quarterly award of $4500. The university's scholarship foundation will invest the endowment in a fund that earns 31 4 percent compounded quarterly. The first award will be made in ten months.

a. Calculate the size of the endowment that will be required to support the scholarship.

b. Unstin.Ting Corporation wants the award to increase in value after the first award. There are two options: A. increasing by $65 per award; or B. increasing at the rate of 2.076 percent compounded monthly. Determine which option requires a smaller endowment and state the difference between the required endowment amounts.

Reference no: EM13202473

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