Question

You did really well in your career and want to set up a scholarship for your...

You did really well in your career and want to set up a scholarship for your Alma mater LMU. The scholarship will pay out $10,000 in its inaugural year, after that it will grow at 2% every year to keep up with inflation. If you think you can earn 8% how much must you put in the account for the scholarship to exist in perpetuity?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
6. Perpetuities Perpetuities are also called annuities with an extended, or unlimited, life. Based on your...
6. Perpetuities Perpetuities are also called annuities with an extended, or unlimited, life. Based on your understanding of perpetuities, answer the following questions. Which of the following are characteristics of a perpetuity? Check all that apply. A. A perpetuity is a series of regularly timed, equal cash flows that is assumed to continue indefinitely into the future. B. The principal amount of a perpetuity is repaid as a lump-sum amount. C. The present value of a perpetuity is calculated by...
Perpetuities are also called annuities with an extended, or unlimited, life. Based on your understanding of...
Perpetuities are also called annuities with an extended, or unlimited, life. Based on your understanding of perpetuities, answer the following questions: Which of the following are characteristics of a perpetuity? Check all that apply. The value of a perpetuity is equal to the sum of the present value of its expected future cash flows. The current value of a perpetuity is based more on the discounted value of its nearer (in time) cash flows and less by the discounted value...
1.Today is your 25thbirthday and you have a dream of retiring on your 65thbirthday. You want...
1.Today is your 25thbirthday and you have a dream of retiring on your 65thbirthday. You want to put aside however much is necessary on your 31stthrough 65thbirthdays (35annual payments) to have enough to retire. You've estimated that you will live until you are 90 and you want the first withdrawal to occur on your 66thbirthday, with the last payment occurring on your 90thbirthday. You think that you will need $175,000 per year to spend during retirement. You estimate constant interest...
You are 20 years old today. Your grandparents set up a trust fund that will pay...
You are 20 years old today. Your grandparents set up a trust fund that will pay you $30,000 per year for 25 years, starting on your 65th birthday to supplement your retirement. If the trust can earn 8% per year, how much will your grandparents need to put in the trust fund today (rounded to the nearest ten dollars)?
you just turned 25 years and want to retire when you turn 65. you plan to...
you just turned 25 years and want to retire when you turn 65. you plan to put $3,500 every year into retirement account from which youncan withdraw money after retirement without having to pay any taxes. you expect to earn a return of 7% on your investments every year. how much money you can expect to have at age 65 if you make your annual deposit now and your last one on the day you turn64?
You have a trust fund that was set up by your great uncle which will pay...
You have a trust fund that was set up by your great uncle which will pay you $40,000 on your 40th birthday and $10,000 on your 50th birthday. Assume that once you receive these two payments you can also invest then at a nominal rate of 5.5% to increase your retirement savings. Assume you still want all of your retirement savings contributions to be a constant annual nominal amount (an annuity). Calculate the amount you will now need to save...
1.You are 18 today want to retire at age 65.   Starting with the day of your...
1.You are 18 today want to retire at age 65.   Starting with the day of your retirement, you would like to have an annuity initially in the amount of $35,000 per year (but growing at a 3% annual rate) for 35 years.      You will inherit $30,000 from your long lost uncle when you turn 34 and save that money as part of your financial plan. Assume an interest rate of 7% for all periods? How much must you put into...
Your job pays you only once a year, for all the work you did over the...
Your job pays you only once a year, for all the work you did over the previous 12 months. Today, December 31, you just received your salary of $64,000 and you plan to spend all of it. However, you want to start saving for retirement beginning next year. You have decided that one year from today you will begin depositing 10 percent of your annual salary in an account that will earn 10.4 percent per year. Your salary will increase...
Your job pays you only once a year for all the work you did over the...
Your job pays you only once a year for all the work you did over the previous 12 months. Today, December 31, you just received your salary of $52,000 and you plan to spend all of it. However, you want to start saving for retirement beginning next year. You have decided that one year from today you will begin depositing 4 percent of your annual salary in an account that will earn 12 percent per year. Your salary will increase...
John really want a Mac Daddy fishing lure. This lure is made of 3 pounds of...
John really want a Mac Daddy fishing lure. This lure is made of 3 pounds of gold and platinum, adorned with 100 carats of diamonds and rubies. The cost of this lure? A cool $1 million. Right now,John can afford to put $10,000 in an account to save up for your ultimate fishing lure. a. If interest is compounded monthly at a rate of 6% per year, how long would it take for John to be able to afford the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT