Answer:
You must donate $50,000.
Explanation:
Giving the following information:
You want to endow a scholarship that will pay $5,000 per year forever.
The school's endowment discount rate is 10 %
We need to find the present value of a perpetual annuity. We will use the following formula:
PV= Cf/ i
Cf= cash flow= 5,000
PV= 5,000/0.10= $50,000
You must donate $50,000.
The correct answer to this open question is the following.
Although the question is incomplete because it has no specific reference to any information or text, we can say the following.
Probably, the question refers to the author called Brooks, who expresses his arguments supporting Capitalism and the free enterprise system as the better form of an economic system. As he is a firm believer in the free enterprise system, his thoughts are biased.
So to have a better perspective, we need at least, another source on the subject. That is why I did my research and found a book that seems to be a good source of the free enterprise system. It is called "Capitalism and Freedom," written by economist Milton Friedman.
Answer:
Present Value= $14,285.71
Explanation:
Giving the following information:
You are thinking of building a new machine that will save you $1,000 in the first year.
The machine will then begin to wear out so that the savings decline at a rate of 2 % per year forever.
Interest rate= 5%
We need to use the formula of a perpetual annuity. Because of the wear out, we need to sum it to the interest rate the 2%
PV= Cf/(i-wear put)
PV= 1,000 / (0.05 + 0.02)= $14,285.71
The Distance Plus partnership has the following capital balances at the beginning of the current year:
Tiger (50% of profits and losses) . . . . . . . . . . . . . . . $85,000
Phil (30%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Ernie (20%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,000
a. If Sergio invests $100,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
b. If Sergio invests $60,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
a. Cash $100,000
Tiger's capital 12,500
Phil's capital 7,500
Ernie's capital 5,000
Sergio's capital 75,000
b. Cash $60,000
Tiger's capital 2,500
Phil's capital 1,500
Ernie's capital 1,000
Sergio's capital 65,000
I found this hope this helps.