Question

1a) You decided to endow a chair in finance for the Monroe College King Graduate School. The goal of the chair is to provide the chair holder with $125,000 of additional financial support per year forever. If the rate of interest is 4 percent, how much money will you have to give the Monroe College foundation to provide the desired level of support?

1B)You plan to save $2,000 each year for the next four years to pay for a vacation. You invest (and reinvest) the money at the beginning of each year. If you can invest it at 6 percent, how much will you have at the end of four years?

Answer 1

part 1A)

Financial Support = CF per anum / Disc rate

= $ 125000 / 4%

= $ 3125000

Part 1B)

FV = Sum [ CF * FVF(r%, n) ]

FVF(r%, n) = ( 1 +r)6n

n - Int rate

Year	CF	FVF @6%	FV of CF
1	$ 2,000.00	1.2625	$ 2,524.95
2	$ 2,000.00	1.1910	$ 2,382.03
3	$ 2,000.00	1.1236	$ 2,247.20
4	$ 2,000.00	1.0600	$ 2,120.00
FV after 4 Years	$ 9,274.19

Pls do rate, if the answer is correct and comment, if any further assistance is required.