Art Arfons, a K-State-educated engineer, has made a considerable fortune. He wis

Question

Art Arfons, a K-State-educated engineer, has made a considerable fortune. He wishes to start a perpetual scholarship for engineering students at K-State. The scholarship will provide a student with an annual stipend of $2500 for each of 4 years (freshman through senior), plus an additional $5000 during the senior year to cover entertainment expenses. Assume that students graduate in 4 years, a new award is given every 4 years, and the money is paid at the beginning of each year with the first award at the beginning of Year I. The interest rate is 8%.
(a) Determine the equivalent uniform annual cost (EUAC) of providing the scholarship.
(b) How much money must Art donate to K-State?

Explanation / Answer

This was asked 3 years ago with no answer yet, so I'm gonna give it a shot

[ 2500 * (P/A,.08,4) + 5000 * (P/F,.08,4) ] * (A/P,.08,4)

EUAC = 3609.21

P = A/i

3609.21/.08 = 45115.13

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