Jim Catlett Establishes a Trust That Is Administered by Mansfield

question 12

Multiple Choice

Jim Catlett establishes a trust that is administered by Mansfield National Bank in the amount of $750,000. Jim has promised that he will donate an additional $50,000 a year to the trust in each of the next 5 years. The income from the trust will go to the state university. How much should the university record as income in the year that the trust is established?

• A) $1,000,000.
• B) $750,000 plus the present value of the five $50,000 donations.
• C) $750,000.
• D) $0.

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Definitions:

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