Answer:
Good Guy Foods
The amount that the firm needs to contribute to the fund, assuming that only the interest income is to be distributed is:
d. $1,724,138
Explanation:
a) Data and Calculations:
Distributable Trust Fund = $125,000
Rate of interest or return = 7.25%
The distributable trust fund is a product of total trust fund multiplied by the rate of return.
The total trust fund = $125,000/7.25%
= $125,000/0.0725
= $1,724,138
Check:
7.25% of $1,724,138 = $125,000
b) Good Guy Foods needs to contribute $1,724,138 in funds that will earn 7.25% annually and equal the scholarship amount of $125,000 annually.
