Question

You have $500,000 to donate to your college. You want to endow a perpetual scholarship that makes its first payment in one yeYou have decided to buy a perpetual bond. The bond makes one payment at the end of every year forever and has an interest ratYou are thinking about buying a savings bond. The bond costs $54 today and will mature in 12 years with a value of $108. What

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Answer #1

rate positively ..

Ans 1 Annual scholarship payment = 30000
500000*6%
Ans = 30000
Ans 2 Payment at the end of year = 50
1000*5%
Ans = 50
Ans 3 we have to use financial calculator to solve this
put in calculator -
FV 108
PV -54
PMT 0
N 12
compute I 5.95%
therefore answer = 5.95%
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