Creating an endowment Personal Finance Problem On completion of her introductory finance course, Marla Lee was so pleased with the amount of useful and interesting knowledge she gained that she convinced her parents, who were wealthy alumni of the university she was attending, to create an endowment. The endowment will provide for three students from low-income families to take the introductory finance course each year in perpetuity. The cost of taking the finance course this year is $400 per student (or $1,200 for 3 students), but that cost will grow by 2.4% per year forever. Marla's parents will create the endowment by making a single payment to the university today. The university expects to earn 8% per year on these funds. a. What will it cost 3 students to take the finance class next year? b. How much will Marla's parents have to give the university today to fund the endowment if it starts paying out cash flow next year? c. What amount would be needed to fund the endowment if the university could earn 12% rather than 8% per year on the funds? ..II. a. For 3 students to take the finance class next year, it will cost $. (Round to the nearest cent.) Compounding frequency, time value, and effective annual rates For each of the cases in the following table, : a. Calculate the future value at the end of the specified deposit period. b. Determine the effective annual rate, EAR. c. Compare the nominal annual rate, r, to the effective annual rate, EAR. What relationship exists between compounding frequency and the nominal and effective annual rates? a. The future value of case A at the end of year 6 is $. (Round to the nearest cent.) Data table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Case A Amount of initial deposit $2,300 $49,000 $1,000 $18,000 Nominal annual rate, r 7% 14% 7% 17% Compounding frequency, m (times/year) 2 6 1 4 Deposit period (years) 6 4 11 MO B D 6