1) You have a loan outstanding. It requires making 3 annual payments of $1000 each at the...
Question:
1)
You have a loan outstanding. It requires making 3 annual payments of $1000 each at the end of 3 the next years. Your bank has offered to restructure the loan so that instead of making the 3 payments as originally agreed, you will make only one final payment in 3 years. If the interest rate on the loan is 5%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment? The final payment the bank will require you to make is? (Round to the nearest dollar.)
2)
You want to endow a scholarship that will pay $10,000 per year forever, starting one year from now. If the school's endowment discount rate is 7%, 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?
(Round to the nearest cent.)