2. An endowed scholarship is one funded by a single deposit in a permanent scholarship accountby a successful alum. The endowment deposit amount remains untouched and unchanged inthe scholarship account. The interest accumulated each year is taken out and paid to adeserving student at the end of each year in a scholarship award. If an endowment earns 3.25%annual interest compounded monthly,a. What is the effective interest rate?b. What would the annual scholarship award be if the amount of the endowment was$300,000?

EAR is the actual return earned on an investment by the investor taking into account the effect of…

Answered: An endowed scholarship is one funded by…

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 23E

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Linda O’Shay deposited $50,000 in a savings account as a perpetual trust. She believes the account will earn 8% annual interest during the first 10 years and 4% interest thereafter. The trust is to provide a uniform end-of-year scholarship at the university. What uniform amount could be used for the student scholarship each year, beginning at the end of the first year and continuing forever?
A wealthy graduate of a local university wants to establish a scholarship to cover the full cost of one student each year in perpetuity at her university. To adequately prepare for the administration of the scholarship, the university will begin awarding it starting in three years. The estimated full cost of one student this year is $38,000 and is expected to stay constant in real terms in the future. If the scholarship is invested to earn an annual real return of 5 percent, how much must the donor contribute today to fully fund the scholarship?
You wish to establish a permanent scholarship at Bond University providing a worthy student with $1000 annually. If invested monies generate an 8% return, how much is needed in the scholarship fund?
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A wealthy graduate of a local university wants to establish a scholarship to cover the full cost of one student each year in perpetuity at her university. To adequately prepare for the administration of the scholarship, the university will begin awarding it starting in three years. The estimated full cost of one student this year is $32,000 and is expected to stay constant in real terms in the future. If the scholarship is invested to earn an annual real return of 10 percent, how much must the donor contribute today to fully fund the scholarship? Please do not give solution and formulae in image format.. thanku
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An endowment fund is to provide an annual scholarship of P4,000 for first 5 yrs, P6,00 for the next 5 yrs, and P9,000 thereafter the fund will be established 1 yr before the first scholarship is awarded. If the fund earns 12% interest, what sum must be deposited?
A wealthy benefactor wants to establish an endowment to pay forever the salary of one university faculty member and the tuition, fees, and books for ten undergraduates. The salary for the endowed faculty member is $96, 000 per year, payable monthly, commencing at the end of the first month of employment. Tuition, fees, and books total $2, 000 per student per quarter, payable at the start of each quarter. Assume the scholarships will be awarded for the summer quarter as well as the three academic year quarters. If the endowment earns 6% compounded monthly, what amount will have to be set aside? Show the cash flow diagram.
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