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Darina [25.2K]
3 years ago
9

Assume your university earns an average rate of return of 5.65 percent on its endowment funds. If a new gift permanently increas

es annual scholarships by $32,000, what was the amount of the gift?
Business
1 answer:
Dennis_Churaev [7]3 years ago
6 0

Answer:

The amount of the gift is 566,371.6814

Explanation:

Average rate of return = Average net profit / average investment

Average rate of return = 5.65% (5.65/100 = 0.0565)

average net profit = 32000

average investment =  unknown

to calculate the amount of the gift which is investment in this case the same formula for Average rate of return will be used i.e

Average rate of return = Average net profit / average investment

0.0565 = 32, 000/ x

cross multiply

0.0565 x = 32,000

divide both sides by 0.0565

x = 32,000/0.0565

32,000/ 0.0565 = x  

x = 566,371.6814

The amount of the gift  is 566,371.6814

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