Private Colleges and Universities Rely on Money Contributed by Individuals

question 122

Multiple Choice

Private colleges and universities rely on money contributed by individuals and corporations for their operating expenses. Much of this money is put into a fund called an endowment, and the college
Spends only the interest earned by the fund. A recent survey of 8 private colleges in the United States
Revealed the following endowments (in millions of dollars) : 60.2, 47.0, 235.1, 490.0, 122.6, 177.5,
95) 4, and 220.0. What value will be used as the point estimate for the mean endowment of all private
Colleges in the United States?

• A) $1,447.8
• B) $180.975
• C) $143.042
• D) $8

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Definitions:

Maturity Value

For an interest-bearing note, it is the sum of the face value (principal) and the interest dollars: MV = P + I.

360-Day Year

An accounting assumption that simplifies interest calculations by using a year composed of twelve 30-day months.

Leap Years

Years that contain 366 days instead of the usual 365, with an extra day added to February, occurring every four years to maintain the calendar year's alignment with the Earth's revolutions around the Sun.

Interest Computation

The process of calculating the amount of interest due on a loan or investment based on the principal amount, rate, and time.