Your Great-Aunt Left You an Inheritance in the Form of a Trust

question 286

Multiple Choice

Your great-aunt left you an inheritance in the form of a trust. The trust agreement states that you are to receive $2,500 on the first day of each year, starting immediately and continuing for fifty years.
What is the value of this inheritance today if the applicable discount rate is 6.35%?

• A) $36,811.30
• B) $37,557.52
• C) $39,204.04
• D) $39,942.42
• E) $40,006.09

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Definitions:

Loss on Sale

The negative financial difference between the sale price of an asset and its book value.

Note Discounted

A financial term referring to a note that is sold for less than its face value before its maturity, usually to improve liquidity.

Goods Sold

Refers to the total value or quantity of products that have been sold or exchanged for money or other value, typically within a specific timeframe.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.