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If you endow it today, but it makes the first award to a student 6 years from today. Under this circumstance, what amount must you donate to endow the scholarship?

Respuesta :

Answer:

Suppose the first award to a student will be $5000 in 6 years and interest rate is 11% annually. Which means $5000 will be Future Value and we have to calculate present value I mean how much we must donate now to endow the scholarship of $5000.  

present value=future value*1/(1+i)^n

present value= 2674 rounded off

so this means we have to endow 2674 now for the scholarship of $5000 in 6 years.

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