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#1




FM question
Mr. Prescott donated 40,000 toward a future scholarship. The scholarships are to be paid according to the following schedule:
End of year1: 1,000 End of year2: 1500 End of year3: 2000 And so on... with the amount of increasing 500 each year until scholarship reaches 5,000. The annual scholarship will remain at 5,000 until the fund is depleted. If the account balance is less than 5,000 at the end of any year (i.e. after awarding of the 5,000 for that year), that remaining amount immediately will be awarded as a smaller scholarship, and the account will be closed. The scholarship fund earns interest earns interest at an effective annual rate of 8%. Determine how many full 5,000 scholarships will be awarded. How come in the solution everything was moved up to time 8 to solve for n? 
#2




Quote:
As discussed yesterday in a different thread, problems like this frequently involve splitting a series of payments into two series, each of which you can evaluate. Here it is likely they did that, and then found it easier to evaluate at least one of them at time 8 than time 0. They could have used other splits, and could have chosen splits that did not require evaluation at time 8. 
#3




Also, on the AO search is your friend. If you had searched the FM forum for “scholarship”, you would have found this thread, among others
http://www.actuarialoutpost.com/actu...d.php?t=114612 In it, no one suggested advancing to time 8, though they didn´t spell out a complete solution. There’s also this one http://www.actuarialoutpost.com/actu...ad.php?t=54547, which does suggest considering time 8. You could also search for Prescott and find those threads, and searching for names like that often gives you only results you care about, but then you wouldn’t pick up threads that didn´t include the donors name. 
#4




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#5




Then why would you be interested in a career that is essentially solving word problems full time?
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