Perpetuity: Roger Barkley wants to set up a scholarship at his alma mater. He is willing to invest $500,000 in an account earning 10 per cent. What will be the annual scholarship that can be given from this investment? (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

To find the annual scholarship from a perpetuity, you need to multiply the initial investment by the interest rate in percentage form. Then, divide that by 100. 
Annual scholarship = ($500,000 x 10%)/100 = $50,000 
Therefore, the annual scholarship that can be given from this investment is $50,000.

Perpetuity: Roger Barkley Wants to Set Up a Scholarship at His