A scholarship fund is accumulated by deposits of 400 at the end of each year. The fund is to be used to pay out one annual scholarship of 2000 in perpetuity, with the first scholarship being paid out one year after the last deposit. Assume / = .08.

(a) Find the minimum number of deposits which must be made in order to support such a fund.

(b) Assume 25 deposits are made. Show that is is possible to pay out one scholarship as described above, but not possible to pay out two such scholarships.

(c) Despite the result in (b), and again assuming 25 deposits are made, it is desired to pay out a second scholarship of 2000 on a regular basis as often as possible. Find the minimum integer value of / such that a second scholarship could be paid out every / years, starting / years after the last deposit.

AppendixLO1