Calculate year-end dividends that it should be able to pay


Problem

1. If the market value of a telecommunications share is $276.70, calculate the year-end dividends that it should be able to pay in perpetuity if money is worth 4.25% compounded semi-annually.

2. A college plans to set up an endowment fund that will provide a scholarship of $5,000 at the end of every quarter, in perpetuity. How much should the college invest in the fund, if the fund earns 4.00% compounded quarterly?

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Finance Basics: Calculate year-end dividends that it should be able to pay
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