Question
2. Mr. Rogers had a great experience during college at the school of business and decided to endow a scholarship fund for finance students. The
2. Mr. Rogers had a great experience during college at the school of business and decided to endow a scholarship fund for finance students. The goal of the fund is to provide the university with $1,000,000 of financial support each year forever. If the rate of interest is 8%, how much money will Mr. Rogers have to give the university today to provide the desired level of support? (3 points)
3. Find the present value of the following cash flows assuming interest rate is 7% (4 points)
Today Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Cash flow 0 $200 - $400 $500 $600 $800 - $350
4. Bank X pays 3.72% interest compounded semi-annually on deposits; Bank Y pays 3.70% compounded quarterly; and Bank Z pays 3.69% compounded daily. Based on the effective annual rate, which bank should you use? (Make sure you calculate the effective annual rate for each bank) (3 points)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started