Wicker Imports established a trust fund that provides $163,500 in scholarships each year for needy students....
Wicker Imports established a trust fund that provides $163,500 in scholarships each year for needy students. The trust fund earns a 3.00 percent rate of return. How much money did the firm contribute to the fund assuming that only the interest income is distributed?
$2,885,121.00
$6,540,000.00
$4,905,000.00
$5,450,000.00
$2,452,500.00
Homework Answers
Annual Scholarship for needy students = $ 163,500
Interest rate on trust funds = 3%
As, Scholarships are paid through Annual Interest earned on deposits, Calcualting the Initial Deppsit amount:
Present Value = Annual payment/Interest rate
Present Value = 163500/3%
Present vAlue = $ 5450,000
So, the money did the firm contribute to the fund assuming that only the interest income is distributed = $ 5450,000
Hence, Option D
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Wicker Imports established a trust fund that provides
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