Maribeth Shoppers manages scholarship endowments for a major public university. Presently, she is trying to determine...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66498b0357f2f_74666498b0299586.jpg)
Transcribed Image Text:
Maribeth Shoppers manages scholarship endowments for a major public university. Presently, she is trying to determine how much scholarship money may be awarded from an endowment with a current balance of $542,000. The endowment's funds are invested in a portfolio whose annual return varies and may be represented as random percentage between 3% and 6% (so it is equally likely to be 3, 4, 5, or 6%, meaning you can use the =RANDBETWEEN(3,6) function in Excel, but make sure you convert your integer into a percentage as you apply your percentage in your simulation calculations). The legal terms of the endowment require Maribeth to determine a constant scholarship payment amount from the endowment that, if made in each of the next 10 years, would result in only 5% chance of the endowment's ending value dropping below its current value. Assume scholarship payments are withdrawn from the fund at the end of each year, so that for the first year, the full initial balance of $542,000 is bearing interest. Use simulation to answer this question. Try out different payout amounts to estimate how much would be an ideal scholarship payment that should be made in the next 10 years. Maribeth Shoppers manages scholarship endowments for a major public university. Presently, she is trying to determine how much scholarship money may be awarded from an endowment with a current balance of $542,000. The endowment's funds are invested in a portfolio whose annual return varies and may be represented as random percentage between 3% and 6% (so it is equally likely to be 3, 4, 5, or 6%, meaning you can use the =RANDBETWEEN(3,6) function in Excel, but make sure you convert your integer into a percentage as you apply your percentage in your simulation calculations). The legal terms of the endowment require Maribeth to determine a constant scholarship payment amount from the endowment that, if made in each of the next 10 years, would result in only 5% chance of the endowment's ending value dropping below its current value. Assume scholarship payments are withdrawn from the fund at the end of each year, so that for the first year, the full initial balance of $542,000 is bearing interest. Use simulation to answer this question. Try out different payout amounts to estimate how much would be an ideal scholarship payment that should be made in the next 10 years.
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Consider a situation with J identical firms that have marginal abatement cost functions for j=1,,J. The marginal damage function is equal to D'(E)=d.EDetermine the optimal allocation and the optimal...
-
(a) In Problem 1, what is the speed of the book when it reaches the hands? (b) If we substituted a second book with twice the mass, what would its speed be? (c) If, instead, the book were thrown...
-
What is the high-low method?
-
Below you will find the annual returns of two assets. Fill in the blanks and graph the returns of the portfolios (rows 13-27). A B C 1 Asset 1 Asset 2 2 31-Dec-90 12.56% 7.56% 3 31-Dec-91 13.50%...
-
Multiple Choice Questions The following items concern determining exception rates using random sampling from large populations using attributes sampling. Select the best response. a. From a random...
-
Assignment Prepare an outsourcing proposal Imagine that you represent a company that provides inbound call center services in the Philippines. For our purposes, well use the real life company...
-
1/ What does John Stuart Mill mean by "qualitatively higher happiness?" 2/ Given the present situation with covid, should those of us who embrace Utilitarianism wear masks even if the state doesn't...
-
what ways can digital communication platforms, with character limits and rapid-fire exchanges, drive a trend toward greater conciseness in everyday communication, and what implications does this have...
-
a) Critically discuss the role of state consent in the formation of rules of international law (7.5 marks) b) Treaties are superior to municipal laws.' With special reference to a Pacific Island...
-
Two members of a backgammon club owned identically sized, red backgammon boards. The first member's board was made of cheap material while the second member's board was quite expensive. One night,...
-
Ewuarbena & Co Manufacturing Ltd have budgeted to sell these quantities of its products, Chocomix, for the coming months in 2020: January - 160,000 sachets; February - 240,000 sachets; March -...
-
Listed below are several transactions that took place during the second and third years of operations for the RPG Company. Amounts billed to customers for services rendered Cash collected from credit...
-
THE ANSWER IS 2 3 8 . 1 HOW DO I GET THAT? Below is a ( partial ) copy of New Jersey Tool's most recent income statement and balance sheet ( all numbers are in millions ) : Income Statement Current...
-
Keating & Partners is a law firm specializing in labour relations and employee-related work. It employs 25 professionals (5 partners and 20 managers) who work directly with its clients. The average...
-
(Appendix) Journalize standard cost transactions (Learning Objective 6) Refer to the data in PI 1-44A. Journalize the usage of direct materials and the assign ment of direct labor, including the...
-
Compute variances and prepare standard cost income statement (Learning Objectives 4, 5, 6) Happ and Sons makes ground covers to prevent weed growth. During May, the company produced and sold 44,000...
-
Prepare a flexible budget for planning (Learning Objective 1) Digital Technologies manufactures capacitors for cellular base stations and other communications applications. The companys static budget...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App