2. A scholarship endowment fund is to be set up today so that a monthly stipend of P15,000 can be given to poor but intellectually capacitated students in 5 years. If WMSU- PICE Student Chapter is to take on a fund-raising project for this purpose, what is the target amount it should raise for this purpose? Assume monthly bank interest rate of 0.5% per month compounded monthly.

2. A scholarship endowment fund is to be set up today so that a monthly stipend of P15,000 can be given to poor but intellectually capacitated students in 5 years. If WMSU- PICE Student Chapter is to take on a fund-raising project for this purpose, what is the target amount it should raise for this purpose? Assume monthly bank interest rate of 0.5% per month compounded monthly.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 22E

See similar textbooks

Similar questions

Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for five years. What is the NPV using 8% as the discount rate?
Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two, $2,500 in year three, $3,000 in year four and $2,000 in year five. What is the NPV using 8% as the discount rate?
Project X costs $10,000 and will generate annual net cash inflows of $4,800 for five years. What is the NPV using 8% as the discount rate?
Comprehensive The following are three independent situations: 1. K. Herrmann has decided to set up a scholarship fund for students. She is willing to deposit 5,000 in a trust fund at the end of each year for 10 years. She wants the trust fund to then pay annual scholarships at the end of each year for 30 years. 2. Charles Jordy is planning to save for his retirement. He has decided that he can save 3,000 at the end of each year for the next 10 years, 5,000 at the end of each year for Years 11 through 20, and 10,000 at the end of each year for Years 21 through 30. 3. Patricia Karpas has 200,000 in savings on the day she retires. She intends to spend 2,000 per month traveling around the world for the next 2 years, during which time her savings will earn 18%, compounded monthly. For the next 5 years, she intends to spend 6,000 every 6 months, during which time her savings will earn 12%, compounded semiannually. For the rest of her life expectancy of 15 years, she wants an annuity to cover her living costs. During this period, her savings will earn 10% compounded annually. Assume that all payments occur at the end of each period. Required: 1. In Situation 1, how much will the annual scholarships be if the fund can earn 6%? How much at 10%? 2. In Situation 2, (a) How much will Charles have at the end of 30 years if his savings can earn 10%? How much at 6%? (b) If Charles expects to live for 20 years in retirement, how much can he withdraw from his savings at the end of each year if his savings earn 10%? How much at 6%? (c) How much would Charles need to invest today to have the same amount available at the time he retires as calculated in Situation 2(a) at 10%? How much at 6%? 3. In Situation 3, how much will Patricias annuity be?
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
A college wants to provide students with a perpetual scholarship of $10,000 at the end of every 3 months. How large should their endowment fund be if invested at X% (choose the rate) compounded quarterly?
A person sets up a sinking fund in order to have P100,000 after 10 years for his children’s college education. How much amount should be set aside after every 6 months into an account paying 5% per annum compounded half-yearly?
What amount of money invested today at an interest of 14.22% compounded quarterly can provide the following scholarships: P30,000 at the end of each year for 6 years; P40,000 for the next 6 years, and P50,000 thereafter? Draw the cashflow diagram.MANUAL SOLVING PLEASE
The National Research Council is considering the establishment of a perpetuity to fund faculty positions at a local university. The ongoing cost will be $9500 at the end of each month. If the money can earn 6.3% compounded monthly in perpetuity, what amount to be invested now is required to fund the perpetuity? Select one: a. $301,587 b. $1,819,024 c. $160,294 d. $612,675 e. $1,809,524
If the university’s College of Engineering can earn 5% on its investments, how much should be in its savings account to fund one $10,000 scholarship each year for 4 years?
You want to endow a scholarship that will pay $11,000-per year forever, starting one year from now. If the school's endowment discount rate is 9%, what amount must you donate to endow the scholarship? The amount you must donate is $_______. (Round to the nearest cent.)
Your company estimates it will have to replace a piece of requirement at a cost of $800,000 in 5 years. To do this a sinking fund is established by making equal monthly payments into an account paying 6.6% compounded monthly. How much should each payment be? Show solution.