Consider that it's preferable to invest $25,000 to provide for a scholarship at the end of each year in perpetuity. The first scholarship will be awarded one year from now. Find the size of the annual scholarship, if the interest rate is 5% compounded annually.

tricotasu

tricotasu

Answered question

2021-02-11

Consider that it's preferable to invest $25,000 to provide for a scholarship at the end of each year in perpetuity. The first scholarship will be awarded one year from now. Find the size of the annual scholarship, if the interest rate is 5% compounded annually.

Answer & Explanation

wheezym

wheezym

Skilled2021-02-12Added 103 answers

Assuming the rate is a constant 5%, use the formula:
V=lekt
Where l=innitial, k=rate in decimal, t= time in years.
V=$25,000e0.05t
Considering it's asked to calculate for one year.
V=$25,0000.05
=$26281.78
Rounded to cents.

Do you have a similar question?

Recalculate according to your conditions!

Ask your question.
Get an expert answer.

Let our experts help you. Answer in as fast as 15 minutes.

Didn't find what you were looking for?