You want to create a scholarship at SMU that would pay exactly $50,000 every year to a

Fantastic news! We've Found the answer you've been seeking!

Question:

You want to create a scholarship at SMU that would pay exactly $50,000 every year to a deserving student. You want this award to last forever, but you want the first payment tn Occur exactly 31 years from now. You will work for the next 30 years and save the same nominal amount of money every month (starting next month) into the scholarship fund.

This fund will earn a nominal 5.4% APR, compounded monthly. If the payments will always be $50,000 per year, and never would you need to save each month? Changes, then how much?

a. If you wanted the first payment to be a nominal $50,000 in exactly 31 years, but then you want each payment to increase with inflation {which is 2.4% APR, compounded semi- annually), then how much would need to he saved each month for the next 30 years?

b. No Same situation as in (h), but now you want your savings to increase with inflation as well!

How much would the first savings amount into the scholarship fund (exactly 1 month from now)?

C. You want to save for retirement so that you can pay yourself a monthly real cash flow of $10,000 per month in retirement, starting exactly 45 years and 1 month from today. You want your retirement savings to last for exactly 40 years. You currently have no savings for retirement, but just received a $5,000 bonus at work that you will contribute right now In addition, you'll save each month, starting next month, until you retire 45 years from now. Your retirement account will earn a nominal 3.4 % APR , compounded quarterly Inflation is 2.8% APR, compounded quarterly.

If you save the same nominal amount each month for the next 45 years, how?