Question

George Jefferson established a trust fund that will provide $200,500 per year in scholarships. The trust fund earns an annual return of 3.1 percent. How much money did Mr. Jefferson contribute to the fund assuming that only income is distributed?

Answer 1

Answer:

The amount of money which Jefferson contribute in order to fund is $6,467,742

Explanation:

Let the amount deposited is Y,

So,

Annual return × Amount deposited = Amount provide by fund

where

Amount deposited is Y

Amount provided by fund is $200,500

Annual return is 3.1 %

Putting the values above:

3.1%  × Y = $200,500

Y = $200,500 / 3.1%

Y = $200,500  × 100 / 3.1

Y = $6,467,741.94 or $6,467,742

Therefore, the money amounts to $6,467,742, which Jefferson need to contribute in order fund.