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handwritten answer is acceptable and answers let it look near pls.need help asap Question 4 a) You have decided to endow your favorite university with
handwritten answer is acceptable and answers let it look near pls.need help asap
Question 4 a) You have decided to endow your favorite university with a scholarship. It is expected to cost RM7,500 per year to attend the university into perpetuity. You expect to give the university the endowment in 10 years and will accumulate it by making equal annual (end of year) deposits into an account. The rate of interest is expected to be 10% for all future time periods. i. ii. How large must the endowment be? (4 marks) How much must you deposit at the end of each of the next years to accumulate the required amount. (5 marks) Continued... b) Alisya has been offered an investment that will pay her RM6,000 three years from today. If her opportunity cost is 8% compounded semiannually, what value should she place on this opportunity today and what is the most she should pay to purchase this payment today? (5 marks) c) You put RM10,000 in an account earning 5%. After a year, you make another deposit into the same account. Four years later (that is 7 years after your original RM10,000 deposit), the account balance is RM20,000. What was the amount of the deposit at the end of year 3? (6 marks) d) What is the difference between an ordinary annuity and annuity due? Which is more valuable? Why? (5 marks) (TOTAL: 25 MARKS)Step by Step Solution
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