Solved

Steve and Ed Are Cousins Who Were Both Born on the Same

question 114

Multiple Choice

Steve and Ed are cousins who were both born on the same day,and both turned 25 today.Their grandfather began putting $2,500 per year into a trust fund for Steve on his 20th birthday,and he just made a 6th payment into the fund.The grandfather (or his estate's trustee) will make 40 more $2,500 payments until a 46th and final payment is made on Steve's 65th birthday.The grandfather set things up this way because he wants Steve to work,not be a "trust fund baby," but he also wants to ensure that Steve is provided for in his old age.
Until now,the grandfather has been disappointed with Ed,hence has not given him anything.However,they recently reconciled,and the grandfather decided to make an equivalent provision for Ed.He will make the first payment to a trust for Ed today,and he has instructed his trustee to make 40 additional equal annual payments until Ed turns 65,when the 41st and final payment will be made.If both trusts earn an annual return of 8%,how much must the grandfather put into Ed's trust today and each subsequent year to enable him to have the same retirement nest egg as Steve after the last payment is made on their 65th birthday?

Evaluate the consequences of failing to adhere to assigned contracts and how party changes affect contractual obligations.

Understand the legal policies behind protecting investment and lending practices through assignments of receivables and related rights.

Grasp the legal considerations and implications of covenant enforcement in leasing and property agreements.

Distinguish between equitable and legal remedies available in breach of contract situations.

Definitions:

Cramming

The practice of intensively studying or memorizing information in a short period, usually immediately before an examination.

Spacing Effect

A phenomenon in which learning is enhanced when study sessions are spaced out over time rather than crammed in a short period.

Anterograde Amnesia

A loss of the ability to create new memories after the event that caused the amnesia, leading to an inability to recall the recent past, while long-term memories from before the event remain intact.