## Susan Would Like to Set Up an Endowment Fund that Would Award

Answer for Susan Would Like to Set Up an Endowment Fund that Would Award in \$1 Only (Instant Download)

1. Susan would like to set up an endowment fund that would award a student with a scholarship of \$500 at the end of each year. The scholarship will continue in perpetuity. The interest rate is 6% compounded semi-annually, and the first award is made one year from today. How much (to the nearest dollar) should Susan invest today? d) \$8210 a) \$33 582 b) \$16 667 c) \$8334

2. John makes payments of \$200 on a loan. The payments will be made at the beginning of each month starting immediately for three years. Find the present value of the loan if the interest rate is 12% compounded monthly.* Oc) \$13654 O d) \$12 543 O a) \$6022 PO b) \$6082

3. Joe has set up an investment to provide a scholarship of \$750 at the beginning of each year in perpetuity starting immediately. Find the present value of this perpetuity if the interest rate is 8% compounded annually. * d) \$10 125 c) \$9375 a) \$9200 Ob) \$10 000

4. It is desired to invest \$25 000 to provide for a scholarship at the end of each year in perpetuity. The interest rate is 5% compounded annually. The first scholarship will be awarded one year from today. Find the size of the annual scholarship. c) \$1250 b) \$2500 d) \$1520 O a) \$3200

5. Sally has invested \$18 000 (single deposit) in an annuity that will start making payments to her in four years. After four years she will receive a monthly payment at the end of every month for 15 years. The interest rate is 6% compounded monthly. What will be the value in her account at the end of four years? a) \$36 220 O d) \$300 000 b) \$22 869 c) \$973 761 6. Carlos deposits \$350 at the end of each month to save for his retirement. His money earns 4.2% compounded quarterly. How much money will Carlos have in 10 years’ time? * c. \$18 258.97 O d. \$14 995.63 O a \$52 044.36 O b. \$52 084.59