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1. 2. 3. answer all for thumbs up Suppose you receive $300 at the end of each year for the next three years. a. If
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Suppose you receive $300 at the end of each year for the next three years. a. If the interest rate is 6%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 6% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)? You want to endow a scholarship that will pay $13,000 per year forever, starting one year from now. If the school's endowment discount rate is 4%, what amount must you donate to endow the scholarship? How would your answer change if you endow it now, but it makes the first award to a student 10 years from today? Assume that your parents wanted to have $90,000 saved for university by your 18 th birthday and they started saving on your first birthday. They saved the same amount each year on your birthday and earned 10.5% per year on their investments. a. How much would they have to save each year to reach their goal? b. If they think you will take five years instead of four to graduate and decide to have $130,000 saved, just in case, how much would they have to save each year to reach their new goalStep by Step Solution
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