A recent alumnus of your university gifted money to the school to fund annual scholarships for needy students

Finance Dec 08, 2020

A recent alumnus of your university gifted money to the school to fund annual scholarships for needy students. The school expects to earn an average rate of return of 6.5 percent and distribute $40,000 annually in scholarships. What was the amount of the gift?

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Expert Solution

Computation of Amount of Gift:

Amount of Gift = Amount Distributed/Average Rate of Return

= $40,000/6.5%

Amount of Gift = $615,384.62

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