On January 2, 2010, Claudia Company Inherited a Trust Fund

question 67

Multiple Choice

On January 2, 2010, Claudia Company inherited a trust fund that she could use for college tuition.Claudia hopes to make five equal withdrawals of $40, 000 from the fund that will earn 10% compounded annually.The first withdrawal will be made on January 2, 2011.How much does she need to have invested in the fund on January 2, 2010, to be able to withdraw the needed amounts each year?

• A)$151, 631
• B)$200, 000
• C)$244, 204
• D)$268, 624

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Definitions:

Slack

The amount of leeway or extra capacity available within a system, which can accommodate delays or unforeseen issues without impacting the outcome.

Anticipating Contingencies

The process of preparing for potential future events or situations, especially unexpected ones, in planning or decision-making.

Incompatibility

The state of being unable to exist or work together in harmony due to differences in characteristics or purposes.

Development

The process of economic, social, and cultural growth, expansion, or evolution, often associated with progressive changes.