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) $18,000
C) $19,000
D) $190,000

Question

Quizplus · Accepted Answer

The college can earn 9.5% of the principal amount each year, which is $190,000 (2,000,000 x 0.095 = 190,000). Therefore, the college can earn $190,000 each year to help its operations.

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