Question

You are an exceptional alumnus of the university and are now a millionaire. You would like...

  1. You are an exceptional alumnus of the university and are now a millionaire. You would like to help reduce the student loan debt of new Trine students by providing scholarship. How much would you need to give Trine (one payment) to fund a $10,000 scholarship for the next 10 years knowing that Trine earns 6% on its investments?

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Answer #1

We simply need to calculate the present value of $ 10000 scholarship for next 10 years.at discount rate of 6 %

Years Cash Outflow Discounting Factor Discounted Value
1 10000 0.943396 9433.96226
2 10000 0.889996 8899.9644
3 10000 0.839619 8396.19283
4 10000 0.792094 7920.93663
5 10000 0.747258 7472.58173
6 10000 0.704961 7049.6054
7 10000 0.665057 6650.57114
8 10000 0.627412 6274.12371
9 10000 0.591898 5918.98464
10 10000 0.558395 5583.94777
Total 73600.8705
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