What amount would be needed to fund the endowment

Assignment Help Finance Basics

Reference no: EM131111469

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 alumni 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 $600 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. 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 9% rather than 6% per year on the funds?

Reference no: EM131111469

Questions Cloud

Examples of the extraneous information : What types of information have companies asked you that you believe was unnecessary? List specific companies and examples of the extraneous information.

The audit of almax company and its subsidiaries : The audit of Almax Company and its subsidiaries for the year ended June 30, 2010 was completed and the trial balance on the attached spreadsheet was prepared. Ruster is domestic subsidiary and Voiles is a foreign subsidiary located in Lyons France. V..

Economic policies hindered integration : Prior to the 1970s the developing countries played a small role in world trade because their own economic policies hindered integration with the world economy. However, many of these countries have since changed their policies and vastly improved ..

Total number of possible positions of point : The product of n consecutive natural numbers is always divisible - denotes the greatest integer less than or equal to x

What amount would be needed to fund the endowment : How large an initial single payment must Marla's parents make to the university to fund the endowment? What amount would be needed to fund the endowment if the university could earn 9% rather than 6% per year on the funds?

How assessment address organizational psychological issues : Why would you choose this assessment? Is there theoretical or empirical support available in the scholarly literature that would suggest your assessment choice is reasonable and acceptable for this situation?

What methods do the authors use to investigate the history : What methods do the authors use to investigate the history of state formation in the Meso-American civilization (historical, ecological, anthropological, ethnographic, archaeological etc)?

Process of radioactivity for imaging : Nuclear medicine is a specialized branch of modern medicine that exploits the process of radioactivity for imaging, diagnosis, and treatment. Many imaging techniques inject small amounts of radioactive material into the body, which are then tracke..

Hospital stay for patients undergoing radical : Hospital stay for patients undergoing radical prostatectomies in a sample of 32 states. The data are listed in the accompanying table.

User Account

All Pages