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Author Question: You have decided to endow a Chair in Finance at Whatsamatta University. How much money must you ... (Read 107 times)

berenicecastro

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on: Jul 11, 2018
You have decided to endow a Chair in Finance at Whatsamatta 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?
  A) 277,777.78
  B) 2,902,777.78
  C) 2,777,777.78
  D) There is not enough information to answer this question.

Question 2

Federal deposit insurance insures each deposit you have with a bank up to 100,000.
 
  Indicate whether the statement is true or false


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spencer.martell

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Reply #1 on: Jul 11, 2018
Answer to Question 1

C
Explanation: C) PV = PMT/r = 125,000/0.045 = 2,777,777.78.

Answer to Question 2

FALSE


berenicecastro

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Reply 2 on: Jul 11, 2018
Great answer, keep it coming :)

yeungji

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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