A university sets up two scholarship funds. The first one pays out $4800 a year, starting one
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Question:
A university sets up two scholarship funds. The first one pays out $4800 a year, starting one year from now. The second one pays out $400 in the first year, $600 in the second year, $800 in the third year, and so on.
a. At what interest rate would the present value of the two scholarships be the same?
b. At what interest rate would the difference between the present value of the two scholarship funds be maximized?
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