Question

Brandon Ramirez wants to set up a scholarship at his alma mater. He is willing to invest $320,000 in an account earning 11 percent annually. What will be the annual scholarship that can be given from this investment? (Round to the nearest dollar.)

A) $50,000
B) $32,600
C) $35,200
D) $40,300

Answer 1

Brandon can set up an annual scholarship of $35,200 from his $320,000 investment at 11% interest, by using only the yearly interest generated from the investment.

Step-by-step explanation:

Brandon Ramirez can establish an annual scholarship from his $320,000 investment which earns 11% annually. To calculate the amount that can be disbursed each year as a scholarship, we'll assume the principal amount remains intact, and only the interest earned is used for the scholarship.

The calculation is relatively straightforward:
Annual scholarship = Principal amount x annual interest rate
Therefore, Annual scholarship = $320,000 x 11% = $320,000 x 0.11 = $35,200.

Rounding to the nearest dollar, the annual scholarship amount would be $35,200, which matches option C provided in the question.

Hence, Brandon can fund an annual scholarship of $35,200 from his investment.