Question
1. Jack, a farmer from Porcupine Plain Saskatchewan, had a couple of bad years. With little rain and a couple of hailstorms, production was very
1.
Jack, a farmer from Porcupine Plain Saskatchewan, had a couple of bad years. With little rain and a couple of hailstorms, production was very low. Last year however ended well, and Jack is ready to start paying back the debt he ran up during the bad times. The local agriculture credit office offered the options listed below. If Jack could earn 8.5% annual on investments, which of the following is correct?
Option 1: $10,000 today plus $25,000 at the end of year 2 Option 2: $5,000 today plus $9,000 at the end of year 1 and $22,000 at the end of year 2 Option 3: $36,000 at the end of year 2
2.
The Herbert Mortlach trust fund pays bursaries of $125,000 each year to students with averages over 80%. The historical average return on the trust fund's investments has been 6.65% compounded annually. What was Mortlach's initial contribution to the fund, assuming that only the interest income is distributed?
$1,525,000
$2,004,699
$1,333,125
$1,900,000
$1,879,699
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