Question

When Alfred Nobel died, he left the majority of his estate to fund five prizes, each to be awarded annually in perpetuity starting one year after he died (the sixth one, in economics, was added a. If he wanted the cash award of each of the five prizes to be $33,000 and his estate could earn 7% per year, how much would he need to fund his prizes? b. If he wanted the value of each prize to grow by 6% per year (perhaps to keep up with inflation), how much would he need to leave? Assume that the first amount was still $33,000 c. His heirs were surprised by his will and fought it. If they had been able to keep the amount of money you calculated in (b), and had invested it at 7% per year, how much would they have in 2014, 118 years after his death? a. If he wanted the cash award of each of the five prizes to be $33,000 and his estate could earn 7% per year, how much would he need to fund his prizes? To fund the five prizes, he would need S. (Round to the nearest dollar.)

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Home nert Page Layout Formulas Data Review View dd-Ins s Cut aCopy Σ AutoSum ー E ゴWrap Text в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 Conditional Format eCell Insert Delete Format Sort &Find & Format Painter Formatting as Table Styles2 Clear Clipboard Alignment Number Cells Editing RX RY RZ SA SB SC SD SE SF SG SH SJ SK 21 5 PRIZES EACH OF 33000 SO TOTAL AMOUNT 165000 RATE 23 24 25 26 27 28 29 30 31 32 7% PEREPTUITY FORMULA AMOUNT/RATE 165000/0.07 AMOUNT NEEDED TO FUND THE PRIZES 2357142.86 GROWING PERPTUITY FORMULA AMOUNT/(RATE - g) 165000/(0.07-0.06) AMOUNT NEEDED TO FUND THE PRIZES 16500000.00 PRESENT VALUE- 16500000.00 7% 118 34 35 36 37 38 39 11 1 トーCALCULATOR RATE FUTURE VALUE 48391569846.87 16500000* (1+0.07)A118 FORMULA AMOUNT (1+RATE)An BOX DILUTION DOLLAR COST AVGMORTGAGE EXPO Sheeti Sheet2 Shel 福 130% LOAN OPTIONS | pv, fv, annu y i CAP STRU VALUE rences: x261 12:12

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