A retired hockey star wants to set up a scholarship fund to assist an underprivileged child who would like to go to a post-secondary institution. He wants to ensure that the student will have $6000 per year for five years. How much should he give to the institution, now, to ensure that this can happen, if the institution is able to invest the money at 10%/a compounded annually?(adsbygoogle = window.adsbygoogle || []).push({});

a)Set up a line diagram showing the present value of each of the $6000 payments.

Note: You will need to find the present value of an amount when calculating the present value of each $6000 payment.

b)Explain why the amounts form a geometric series.

c)Calculate the sum of this geometric series using . Sn=( a(r^n-1)) / (r-1)

a) okay so it goes 6000,6000/(1.1)^1 ... 6000/(1.1)^4 (1+i)=1.1

b) it is geometric because the ratio btwn consecutive terms are constant

c) Okay now i dont know how to sub in and then solve it because i dont know A because i am assuming that he is giving 1 payment for the whole 5 years the kid is going to an university. and i dont know Sn because i am SOLVING for Sn so how do i sub for r and how do i solve?

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# Homework Help: Interest on principal over 5 years

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