3) (24 points) An alumni association wants to establish a scholarship fund that can provide $500,000...

  

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3) (24 points) An alumni association wants to establish a scholarship fund that can provide $500,000 annually for scholarships for 20 years, starting exactly 6 years from now (i.e., starting t=6). The association is planning to make the following cash contributions- an initial contribution now (t-0) followed by 5 annual (t=1 through 1-5) contributions. The association just contributed $750,000. If the fund is expected to earn 15% per year compounded annually, determine the annual contribution the association would have to make over the next 5 years. 3) (24 points) An alumni association wants to establish a scholarship fund that can provide $500,000 annually for scholarships for 20 years, starting exactly 6 years from now (i.e., starting t=6). The association is planning to make the following cash contributions- an initial contribution now (t-0) followed by 5 annual (t=1 through 1-5) contributions. The association just contributed $750,000. If the fund is expected to earn 15% per year compounded annually, determine the annual contribution the association would have to make over the next 5 years.

Answer rating: 100% (QA)

Step 1 Calculate the present worth PW of the cash flows between t6 and t20 at t5 This is the amount ... View the full answer