Sammy Has Just Inherited an Annuity

question 20

Multiple Choice

Sammy has just inherited an annuity.He will receive six equal annual amounts of $8, 000, beginning today.Assuming a 12% interest rate compounded annually, the present value today of all receipts is

• A)$30, 535
• B)$32, 891
• C)$36, 838
• D)$48, 000

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Definitions:

Trend Indication

An analysis or estimate aimed at predicting the future direction of something, often based on past and present data.

Partial Balance Sheet

A financial statement that shows a portion of a company’s assets, liabilities, and equity at a specific point in time, rather than the complete picture.

Current Assets

Assets that are expected to be converted into cash within one year or within the operating cycle of the business, whichever is longer.

Assets Due

Assets or receivables that are scheduled to be received or settled at a future date.