A Donor Agrees to Contribute $5,000 Per Year at the End

question 71

Multiple Choice

A donor agrees to contribute $5,000 per year at the end of each of the next five years to a voluntary health and welfare organization. The donor did not place any use restrictions on the amount pledged. The stream of the payments is discounted at 6 percent. The first payment of $5,000 is received at the end of the first year. The present value factor for a five-payment annuity due on June 30, 20X9, at 6 percent is 4.2124.
Based on the preceding information, at the end of the first year, the pledge increased unrestricted net assets by:

• A) $25,000.
• B) $21,062.
• C) $4,212.
• D) $5,000.

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