Donor contribute today to fund the scholarship

Assignment Help Financial Management

Reference no: EM13813503

An alumni wants to establish a scholarship that covers the full cost of tuition for one high achiever each year in perpetuity. The university, on the advice of the Finance Department has opted to begin awarding it in 5 years. This year, the estimated full cost of studies for one student is $27,950 and is expected to grow annually at a 3% inflation rate. If the scholarship is invest to earn a nominal rate of 6%, how much must the donor contribute today to fund the scholarship?

a) $937,221.07

b) $603,894.27

c) $742,294.46

d) $831,293.87

Reference no: EM13813503

Questions Cloud

What is the rate of return on this investment : Consider the following Investment Opportunity: What is the rate of return on this investment?

High-risk area for natural disasters : Suppose your company has a building worth $380 million. Because it is located in a high-risk area for natural disasters, the probability of a total loss in any particular year is 1.2 percent. What is your company’s expected loss per year on this buil..

Bond investment transactions : Journalize the entries to record the following selected bond investment transactions for Southwest Bank: Purchased $400,000 of Daytona Beach 5% bonds at 100 plus accrued interest of $4,500. Received the first semi annual interest.

Differences between stand-alone risk-diversifiable risk : Suppose an individual investor starts with a portfolio that consists of one randomly selected stock. What will happen to the portfolio’s risk if more and more randomly selected stocks are added? Explain the differences between stand-alone risk, diver..

Donor contribute today to fund the scholarship : An alumni wants to establish a scholarship that covers the full cost of tuition for one high achiever each year in perpetuity. The university, on the advice of the Finance Department has opted to begin awarding it in 5 years. This year, the estimated..

What types of bubbles were discussed in the bubble decade : What types of bubbles were discussed in The Bubble Decade? Given that our markets in the U.S. are supposed to be fairly efficient, how can such bubbles exist and why do new bubbles keep occurring?

Target capital structure-maximizes value for one firm : Is the D/E ratio (target capital structure) that maximizes value for one firm going to be the same for all firms? Explain specifically why it would be the same or vary for different firms and industries

Cash for making a very lucrative investment : What issues would you discuss with a company that was thinking about cutting their dividend to provide more cash for making a very lucrative investment?

New alterative aircraft technology : Targaryen Aeronautics is exploring the possibility of making a significant purchase of a new alterative aircraft technology to add to their current fleet – a dragon. The purchase price of the dragon is expected to be $4,000,000 with additional shippi..

User Account

All Pages