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Question 3. A Lilian and Brad both graduated from a law college, decided to donate money to their college. They setup 5 scholarships per year starting in 2046 for every year (assume more than 100 years). If $40,000 is invested in the trust fund in the year 2021 and if it earns a very good rate of return of 10% per year, what will the amount of each scholarship are starting in 2035

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Answer:

If $40,000 is invested in the trust fund in the year 2021 and if it earns a very good rate of return of 10% per year, the amount of each scholarship, starting in 2035 will be:

= $167,089.93

Explanation:

a) Data and Calculations:

Investment in the trust fund in 2021 = $40,000

Investment period = 15 years (2021 to 2035)

Rate of return = 10%

From an online financial calculator:

N (# of periods)  15

I/Y (Interest per year)  10

PV (Present Value)  40000

PMT (Periodic Payment)  0

Results

FV = $167,089.93

Total Interest $127,089.93

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