Assume That $100 Is Deposited at the End of Each

question 17

Multiple Choice

Assume that $100 is deposited at the end of each year for five years at 10% compound interest and that no withdrawals are made over the five- year period. Based on this data, which one of the following statements is correct?

• A) The present value can be determined by computing the present value of $500 in five years at 10%.
• B) The future value will be $550.
• C) The present value can be determined by computing the present value of a $100 ordinary annuity for five years at 10%.
• D) The present value will be $500.

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Definitions:

Inter Vivos Trust

A trust created during the lifetime of the grantor, allowing for the management and distribution of assets before death.

Spendthrift Trust

A legal arrangement that restricts the beneficiary's ability to access the trust capital directly, thus protecting the trust assets from creditors.

Income-Producing

Capable of generating income, typically through investment or business operations.

Real Property

Land and anything permanently affixed to it, such as buildings and structures, legally recognized as immovable property.