A successful investor has decided to set up a scholarship fund for deserving students at her alma mater. Her plan is for the fund to be capable of awarding $50,000 annually in perpetuity The first scholarship is to be awarded and paid out exactly five years from today. The funds will be deposited into an account immediately and will grow at a rate of 5% p.a., compounded semiannually, for the foreseeable future. How much money must the investor donate today to fund the scholarship?

A successful investor has decided to set up a scholarship fund for deserving students at her alma mater. Her plan is for the fund to be capable of awarding $50,000 annually in perpetuity The first scholarship is to be awarded and paid out exactly five years from today. The funds will be deposited into an account immediately and will grow at a rate of 5% p.a., compounded semiannually, for the foreseeable future. How much money must the investor donate today to fund the scholarship?

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter27: Time Value Of Money (compound)

Section: Chapter Questions

Problem 10E

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