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Author Question: You have decided to endow the insert your name here Chair in Finance at the State University. How ... (Read 211 times)

Bob-Dole

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on: Jul 10, 2018
You have decided to endow the insert your name here Chair in Finance at the State University.
 
  How much money must you deposit into the endowment account today if the Chair pays 125,000 per year forever (first payment one year from today) and is invested at a rate that pays out 4.50 per year forever
  What will be an ideal response?

Question 2

Given a positive interest rate and a positive cash flow, an ordinary annuity always has a greater future value than an annuity due of the same size and number of cash flows.
 
  Indicate whether the statement is true or false.


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fauacakatahaias

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: PV = = = 2,777,777.78.

Answer to Question 2

Answer: FALSE
Explanation: The annuity due is always greater.


Bob-Dole

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Reply #2 on: Jul 10, 2018
Thank you :)


fauacakatahaias

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Reply #3 on: Jul 10, 2018
Happy to help you


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