You Were Left $100,000 in a Trust Fund Set Up

question 160

Multiple Choice

You were left $100,000 in a trust fund set up by your grandfather.The fund pays 6.5% interest.You must spend the money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately.How much could you withdraw today and at the beginning of each of the next 3 years and end up with zero in the account?

• A) $24,736
• B) $26,038
• C) $27,409
• D) $28,779
• E) $30,218

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Definitions:

Miller

Often refers to a person who operates a mill, a machine to grind a cereal crop to make flour.

Risk

The exposure to potential financial loss or gain, often evaluated in decisions involving investment or finance.

Leverage

The strategy of using borrowed money to increase the potential return of an investment.

Acquisition

A merger in which one company acquires the stock of another. May be friendly or hostile (unfriendly). See Merger.