The Calculation of the Value of a Life Estate in a Trust

question 114

Multiple Choice

The calculation of the value of a life estate in a trust generally does not depend upon which of the following factors?

• A)The age of the life tenant.
• B)The Section 7520 interest rate.
• C)The value of the property at the time of the transfer.
• D)The manner in which the trust corpus is invested.
• E)All of these factors are utilized in the calculation of the value of a life estate in a trust.

---

Definitions:

Working Capital

A firm’s investment in short-term assets—cash, marketable securities, inventory, and accounts receivable.

MVA

Market Value Added, a measure of a company's financial performance representing the difference between the market value of a firm and the capital contributed by investors.

Market Value Added

A calculation that shows the difference between the market value of a company and the capital contributed by investors.

Economic Value Added

A measure of a company's financial performance based on the residual wealth calculated by deducting cost of capital from its operating profit.