A donor established a new scholarship that will pay $5,000 every 6 months to a deserving Kelley student. The scholarship will be awarded for the first time in November of 2021 (12 months from today). The donor decides that the scholarship should be provided in perpetuity. The IU Foundation manages investments like this for the Business School. The Foundation anticipates earning an APR of 8% per year on the invested funds, compounded monthly. What is the amount of the donation that must be given to the IU Foundation today to fully endow this Kelley scholarship?

A donor established a new scholarship that will pay $5,000 every 6 months to a deserving Kelley student. The scholarship will be awarded for the first time in November of 2021 (12 months from today). The donor decides that the scholarship should be provided in perpetuity. The IU Foundation manages investments like this for the Business School. The Foundation anticipates earning an APR of 8% per year on the invested funds, compounded monthly. What is the amount of the donation that must be given to the IU Foundation today to fully endow this Kelley scholarship?

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 23E

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A donor established a scholarship that will pay $15,000 per year to a Kelley student. The scholarship will be awarded for the first time in September of 2023 (i.e., the first payment occurs three years from now). The donor decides that the scholarship should be provided in perpetuity. The IU Foundation manages investments like this for the Business School. The Foundation anticipates earning an APR of 5.6% per year on the invested funds. What is the amount of the donation that must be given to the IU Foundation today to endow this Kelley scholarship?
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