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

question 99

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, the increase in present value of the contributions receivable recognized at the end of the first year equals:

• A) $5,000.
• B) $1,264.
• C) $4,212.
• D) $787.

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Definitions:

Level of Significance

Another term for significance level, indicating the criterion used for rejecting the null hypothesis in statistical hypothesis testing.

Treatment Sum

The total sum of all the values of the outcome variable for a specific treatment level in an experimental design.

Squared Deviations

The squares of the differences between each data point in a data set and the mean of that data set, used in various statistical calculations.

Grand Mean

The grand mean is the mean of means, calculated by taking the average of the mean values from multiple groups or samples within the data.