The local botanical society wants to ensure that the gardens in the town park are properly cared for. The group recently spent $100,000 to plant the gardens. The members want to set up a perpetual fund to provide $100,000 for future replantings every 10 years. a) If interest is 5%, how much money is needed for the fund? b) If the last replanting is in year 100, how much is needed for the fund?

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Karly Rivera

Business

25 September, 07:20

The local botanical society wants to ensure that the gardens in the town park are properly cared for. The group recently spent $100,000 to plant the gardens. The members want to set up a perpetual fund to provide $100,000 for future replantings every 10 years. a) If interest is 5%, how much money is needed for the fund? b) If the last replanting is in year 100, how much is needed for the fund?

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Donovan Oconnell · Answer 1

The amount of money needed for the fund, if the interest is 5℅ is calculated as follows:

(5% of $100,000) + $100,000

= $5000 + $100,000 = $105,000

(b) In years 100, the interest will be 50% (explained below)

50% of $100,000 is $50,000

If perpetual fund is $100,000,

The amount of money needed for the replanting fund after year 100 is

$100,000 + $50,000 = $150,000

Explanation:

(a) part

After 10 years, the interest is 5%.

5% of 100,000 = (5/100) x 100,000 = $5,000.

The interest will be added to perpetual fund.

Therefore,

The amount needed for the fund after 10 years is

Interest after ten years + perpetual fund = $5,000 + $100,000 = $105,000.

(b) part

If the last replanting is year 100 ago, the percentage interest can be analyzed as follows:

5% in 10years

10% in 20years

15% in 30years

20% in 40years

25% in 50years

30% in 60years

35% in 70years

40% in 80years

45% in 90years

50% in 100years.