If a Donation of $100,000 Is Expected to Pay Out

question 36

Multiple Choice

If a donation of $100,000 is expected to pay out scholarships of $10,000 every year and the funds earn 7.5% compounded annually, how long will it be before the first annual payment can be made?

• A) 3 years
• B) 5 years
• C) 7 years
• D) 9 years
• E) 11 years

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Definitions:

Large Sales Volume

A significant amount of products or services sold within a given period, indicating high demand or successful sales strategies.

Retail Method

An accounting technique used to estimate the ending inventory and cost of goods sold by calculating a cost to retail price ratio.

Cost-To-Retail Ratio

A method used to estimate the ending inventory of a business, calculated by dividing the cost of goods available for sale by the retail price of the goods.

Gross Profit Rate

The ratio of gross profit to net sales, used to assess a company's financial health by indicating the efficiency of its production process.