present value (maybe)

[tultul_gis]

I know how to do this but i am confused with the last sentence where it says assume the only the interest income is distributed?

Mrs. Black established a trust fund that provides $65,000 in scholarships each year for needy
students. The trust fund earns a fixed 5.5 percent rate of return. How much money did Mrs. Black
contribute to the fund assuming that only the interest income is distributed?

 

[Denis]

I know how to do this but i am confused with the last sentence where it says assume the only the interest income is distributed?
Mrs. Black established a trust fund that provides $65,000 in scholarships each year for needy
students. The trust fund earns a fixed 5.5 percent rate of return. How much money did Mrs. Black
contribute to the fund assuming that only the interest income is distributed?

Means the amount contributed times .055 = 65,000

 

[tultul_gis]

I know how to do this but i am confused with the last sentence where it says assume the only the interest income is distributed?
Mrs. Black established a trust fund that provides $65,000 in scholarships each year for needy
students. The trust fund earns a fixed 5.5 percent rate of return. How much money did Mrs. Black
contribute to the fund assuming that only the interest income is distributed?

Means the amount contributed times .055 = 65,000

so, i guess,
it would be
PV = 65000/(1+0.055)^1

Am i right?

 

[Denis]

No.