Greendale Community College has established a scholarship that will provide awards atthe start of every 6 months for the foreseeable future. To fund these, $1,470,000 isbeing placed in a trust fund earning 9.0% compounded annually. How much is eachscholarship payout?$0.00Round to the nearest cent

The given problem relates to perpetuity. A perpetuity is a series of uniform cash flows over an…

Answered: Community College has established a…

Business

Finance

Community College has established a every 6 months for the foreseeable fu d in a trust fund earning 9.0% compo payout?

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

Related questions

Q: An investment banker would like to receive $1,200 at the beginning of every 3 months from her…

A: The concept of the time value of money states that the current worth of money is more than its value…

Q: Jessica made equal deposits at the beginning of every 3 months into an RRSP. At the end of 8 years,…

A: Using excel PMT function

Q: Tara wishes to accumulate $25,000 in 3 years. Use the appropriate formula to find the sinking fund…

A: Future Value = $25,000 Number of Years = 3 Years Interest Rate = 8% compounded semi-annually

Q: sinking fund is established such that $12,000 will be available to replace a facility at the end of…

A: In this we need to calculate the sinking fund factor from that we can get the payment.

Q: Which formula can be used to estimate the accumulated amount in a fund earning 8.5% interest at the…

A: An approach to determine how much money a stream of payments will be worth at some future date is to…

Q: Mr. Jones will invests P 5,000 in a fund at the end of each 6 months to accumulate P 100,000 to buy…

A: Compounding of interest means, interest is received on principal as well as the earned interest…

Q: Ali is making $1,000 monthly deposits into a fund that pays interest at a rate of 6% compounded…

A: Given: Monthly deposit = $1,000 Interest rate = 6% Years = 10

Q: Mr. Jones will invests P 5,000 in a fund at the end of each 6 months to accumulate P 100,000 to buy…

A: When an investor makes regular periodic deposits in an investment, this is known as an annuity. The…

Q: A trust fund amounting to ₱6700000 earns 7.4% annual interest. If ₱150,000 is to be withdrawn at the…

A: Amount of trust fund is P6,700,000 Interest rate is 7.4% Time period is 5 years Amount of withdrawl…

Q: a. What is the amount of the payments that Ned Winslow must make at the end of each of 8 years to…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: ABC Ventures has raised their $100M fund, ABC Ventures I, with management fees computed based on…

A: Under Venture capital financing, lifetime fees are the total amount of fees paid over the lifetime…

Q: A fund is to be donated by a wealthy man to provide annual scholarships to deserving students. The…

A: An annuity is a series of cash flows that involve an equivalent periodic amount over a specific time…

Q: A sinking fund amounting to $21,000 is to be created by making payments at the beginning of every…

A: given, p= $21,000 n=6 r= 5.9%

Q: Tara wishes to accumulate $29,000 in 5 years. Use the appropriate formula to find the sinking fund…

A: first thing is calculate semiannual interest rates and semiannual period and from table you can get…

Q: Southern Land Company plans to raise $200,000 over a 2-year period so they can purchase a parcel of…

A: Determine the quarterly payment to the sinking fund using the Excel PMT function with the following…

Q: payments

A: As the payments are made at the end of the year, this is an ordinary annuity. Hence the future value…

Q: Determine the amount that must be deposited every 3 months a fund paying 12% compounded quarterly in…

A: Computation of the amount that must be deposited in order to have P25000in 8 years having 12%…

Q: An endowment fund is providing an annual scholarship of P50,000 for the first five years, P60,000…

A: Present Value: The present value is the value of cash flow stream or the fixed lump sum amount at…

Q: Your company has decided to set up a fund for its employees with an initial payment of Rs 27,500…

A: a.Calculate the size of the fund as follows:

Q: Jenna made equal deposits at the beginning of every 3 months into an RRSP. At the end of 6 years,…

A: Quarterly deposit = P Future value (FV) = $55,000 Interest rate = 3.50% Quarterly interest rate (r)…

Q: Shawn made equal deposits at the beginning of every 3 months into an RRSP. At the end of 10 years,…

A: Compounding of interest means, interest is received on principal as well as the earned interest…

Q: A fund is to be donated by a wealthy man to provide annual scholarships to deserving students. The…

A: Fund grant for each year = P120,000 for 5 years Grant each quarter = P30,000 for next 5 years Grant…

Q: Maria deposits $1,200, $500, and $2,000 at t = 1, 2, and 3, respectively. If the fund pays 8%…

A: FUTURE VALUE FORMUA: FUTURE VALUE = PRESENT VALUE×1+RNWHERE,R= RATE PER PERIODN=NUMBER OF PERIOD

Q: Save The Simpson Company invested $20000 in a fund that was earning interest at a rate of 5%…

A: Given data, Investment p = $20000 Rate of interest r = 5%= 0.05 compounded semi annually, so, n=2…

Q: Mr. Jones will invests P 5,000 in a fund at the end of each 6 months to accumulate P 100,000 to buy…

A: An annuity is the total of all periodic payments or investments made at a fixed rate over a certain…

Q: Beginning next year, a foundation will support an annual seminar on campusby using the interest…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: You deposit 20,000 today into a fund paying (i)=8%. From this fund, you receive 10 payments of R,…

A: Computation of R:

Q: determine the quarterly installment that should be deposited into the fund.

A: Introduction: Sinking fund can be defined as a type of fund which is created for repaying the debt.…

Q: An endowment fund is to provide an annual scholarship of P4,000 for first 5 yrs, P6,00 for the next…

A: We should compute the present value of all planned future payments and that has to be deposited.…

Q: quarterly. Find the amount available in this fund after 10 years

A: Quarterly payment is $30,000. Maturity period is 10 years. Rate of interest is 6%. Compounding…

Q: If a college freshman invests a $10000 gift at 8% per annum compounded quarterly, how much can be…

A: Present value of investment (PV) = $10000 Interest rate = 8% Quarterly interest rate (r) = 8%/4 = 2%…

Q: Erin contributed $3,750 at the end of every 3 months into an RRSP fund earning 3.37% compounded…

A: Following details are given in the question : Quarterly deposit (periodic payment) = $3750 Interest…

Q: ma'am minda started to deposit P2,000 quarterly in a func that pays 5.5% compounded quarterly. How…

A: Quarterly Deposit = 2000 Interest rate = 5.5℅/4 = 1.375℅ per quarter N = 24 quarters

Q: You deposit the following at the end of each year into a growth mutualfund that earns 11 percent per…

A: a) Computation of worth of the fund:

Q: To create a college fund, a parent makes a sequence of 20 yearly deposits of $4000 each year in a…

A: given information pmt = $4000 interest annually = 2.8% time period = 20 years

Q: ayments of $4,000 are made into a fund at the beginning of each year for ten years. The fund is…

A: Future value of a present value is the value of that amount after taking into account the time value…

Q: If annual deposits of $1,000 are made into a fund paying 12% interest compounded annually, how much…

A: Present Value of deposits (PV)=$1,000 Interest Rate (r)= 12% compounded annually Time period (n)= 5…

Q: May deposits PhP 20,000 into a fund at the beginning of nd of 15 years, she makes an additional…

A: The present value of the future payments to be received will give the the future value of payments…

Q: Kenny decided to make a P1,000 monthly deposit in a fund that pays 6% compounded quarterly. How much…

A: Monthly deposit (P) = P1000 Interest rate = 6% Monthly interest rate (r) = [{1+(0.06/4)}4]1/12-1…

Q: A person sets up a sinking fund in order to have P100,000 after 10 years for his children’s college…

A: Future Value Required = 100,000 Time Period = 10 years or 20 semi annual periods Interest Rate =…

Q: A 1,000,000-trust fund was set up and to be used by an 8-year old nephew when he goes to college. In…

Q: Mr. Moreno started to deposit Php. 5,500 quarterly in a fund that pays 2.5% compounded monthly. How…

A: Note: We are providing the solution of question no.1 as specified in the first line of the question.…

Q: Tara wishes to accumulate $29,000 in 5 years. Use the appropriate formula to find the sinking fund…

A: Sinking fund is referred as the account which consists amount of money kept aside to pay off a debt.…

Q: Cooper & Cooper Development Company plans to raise S125,000 over a 3-year period so they can…

A: Future value required (FV) = $ 125000 Period = 3 Years Number of quarterly payments (n) = 3*4 = 12…

Q: A fund is to be donated by a wealthy man to provide annual scholarships to deserving students. The…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: Three EOY payments of $300 each are made in a fund that gives an interest of 12%. What amount is…

A: The question is based on calculation of future value of periodic payments with the concept of…

Concept explainers

Income Statement

Income Statement also commonly called a profit and loss statement, one of the key financial statements (considered together with balance sheet and cash flow statement) which shows the revenues and expenses, as well as the gains and losses of a company for a given period. In other words, it presents the financial performance/profitability of a business over a specified accounting period.

Question

Greendale Community College has established a scholarship that will provide awards at
the start of every 6 months for the foreseeable future. To fund these, $1,470,000 is
being placed in a trust fund earning 9.0% compounded annually. How much is each
scholarship payout?
$0.00
Round to the nearest cent

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

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?
A donor established a new scholarship that will pay $5,000 every 6 months to a deserving Kelley student. The scholarship will be awarded for the first time in November of 2021 (12 months from today). The donor decides that the scholarship should be provided in perpetuity. The IU Foundation manages investments like this for the Business School. The Foundation anticipates earning an APR of 8% per year on the invested funds, compounded monthly. What is the amount of the donation that must be given to the IU Foundation today to fully endow this Kelley scholarship?
Beginning next year, a foundation will supportan annual event on campus with the earnings of a$420,000 gift it received this year. It is felt that 8.4%interest will be realized for the first 12 years, but thatplans should be made to anticipate an interest rate of6% after that time. What amount should be added tothe foundation now to fund the event at the $45,000level into infinity?
The Pithybottoms want to make a donation to set up a scholarship trust fund at Hinose College. The fund is to support payments of $5,000 at the end of every three months in perpetuity. If the fund earns 7.5% compounded quarterly, how much must they donate?
A charity will be donated by a wealthy man to provide annual scholarships to deserving students. The charity will grant $120,000 each year for the first 5 years, $30,000 per quarter for the next 5 years and $10,000 each month thereafter . The scholarship will start one year after the fund is established. What is the amount of the donation if i = 12% compounded annually?
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 fund is to be donated by a wealthy man to provide annual scholarships to deserving students. The fund will grant P50,000 for each year for the first 5 years at 8% compounded monthly, P80,000 for each year for the next 5 years at 8% compounded quarterly, and P100,000 each year thereafter at 8% compounded semi-annually interest,. The scholarship will start one year after the fund is established. What is the amount of the donation?
A fund is to be donatedby a wealthy man to provide annual scholarships to deserving students. The fundwill grant P120,000 each year for the first 5 years, P 30,000 per quarter forthe next 5 years and P10,000 each monththereafter . The scholarship will start one year after the fund is established.What is the amount of the donation if i = 12% compounded annually?
A trust will provide $12,000 to a county library at the beginning of each 3-month period for the next 2.5 years. If the money is worth an annual rate of 6.8%, compounded quarterly, find the amount in the trust when it begins. Round your answer to the nearest cent. a. $111,364.28 b. $85,257.67 c. $352,106.39 d. $284,945.37
A trust will provide $12,000 to a county library at the beginning of each 3-month period for the next 2.5 years. If the money is worth an annual rate of 6.8%, compounded quarterly, find the amount in the trust when it begins. Round your answer to the nearest cent. a. $111,364.28 b. $85,257.67 c. $352,106.39 d. $284,945.37 e. $246,873.08
Beginning next year, a foundation will support an annual seminar on campusby using the interest earnings on a $100,000 gift it received this year. It is determined that 6% interest will be realized for the first 10 years, but that plans should be made to anticipate an interest rate of only 4% after that time. What amount should be added to the foundation now in order to fund the seminar at a level of $10,000 per year into infinity?
An endowment fund is providing an annual scholarship of P50,000 for the first five years, P60,000 for the next five years, and P90,000 thereafter. The fund will be established today and will award the first scholarship after a year. The fund earns 4.5 % annual interest. Find the present worth of this cost.