Mrs. Black established a trust fund that provides $65,000 in scholarships each year for needy students. The trust fund earns a ﬁxed 5.5% rate of return. How much money did Mrs. Black
Contribute to the fund assuming that only the interest income is distributed?

Question

Quizplus · Accepted Answer

The annual interest income needed is $65,000. To find the principal amount that earns this interest at a 5.5% rate, divide $65,000 by 0.055, which equals $1,181,818.18.

Mrs Black Established a Trust Fund That Provides $65,000 in Scholarships