You Just Inherited a Trust That Will Pay You $100,000

question 71

Multiple Choice

You just inherited a trust that will pay you $100,000 per year in perpetuity. However, the first payment will not occur for exactly five more years. Assuming a 10 percent annual interest rate, what is the value of this trust?

• A)$620,921
• B)$683,013
• C)$1,000,000
• D)$1,100,000

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Definitions:

Projective Instruments

Psychological assessment tools that use ambiguous stimuli to elicit responses that are thought to reveal hidden emotions and internal conflicts.

Mental Age

Mental age is a concept used to describe the level of intellectual development as compared to the average intellectual capacity of individuals at a particular age, often used in IQ testing.

Chronological Age

The exact age of a person or thing, measured in years from the date of birth or inception to the current date.

IQ

A measure of a person's intellectual abilities as compared to the average population, typically assessed through standardized tests.