A College Received a Contribution to Its Endowment Fund of $2

question 119

Multiple Choice

A college received a contribution to its endowment fund of $2 million. They can never touch the principal, but they can use the earnings. At an assumed interest rate of 9.5 percent, how much can the college earn to help its operations each year?

• A) $95,000
• B) $19,000
• C) $190,000
• D) $18,000

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Definitions:

Oral Contract

An agreement between parties that is spoken and not written, yet it is legally binding.

Employment Agreement

A contractual relationship between an employer and an employee outlining the terms of employment, including duties, responsibilities, and compensation.

Purchase

The act of buying goods, services, or property in exchange for money or other consideration.

Sale

The passing of title (evidence of ownership rights) from a seller to a buyer for a price.