3 You Run The Endowment At A Local University An Alumnus Promises To Give The University 1 Million In 20 Years I E 1 (10.97 KiB) Viewed 10 times
3. You run the endowment at a local university. An alumnus promises to give the university $1 million in 20 years (i.e. the $1 million will be received 20 years from today). To come up with the money, the alumnus plans to sell the business in 5 years and then invest some of the proceeds to earn 12% per year over the following 15 years. How much must be invested 5 years from now to reach the goal?
4. You are investigating an investment opportunity. The security requires you to make monthly payment of $300 each (1st payment is 1 month from today), over next 15 years. It offers a nominal annual return of 8% with quarterly compounding. What is the future value of this security at the end of its life (including all your payments and all interests)? 5. You are offered an investment that requires you to make a payment today of $3,000. You then make payments of $1,000 per year every year for the next 10 years. At the end of 10 years, you will be paid twice the total amount you have contributed. What is the implied annual rate of return on this investment?
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