Aunt Clarisse Has Promised to Leave You an Annuity That

question 29

Multiple Choice

Aunt Clarisse has promised to leave you an annuity that will pay $60 next year and grow at an annual rate of 4%. The payments are expected to go on indefinitely and the interest rate is 9%. What is the value of the growing perpetuity?

• A) $667
• B) $693
• C) $1,200
• D) $1,248

---

Definitions:

Cooling-Off Rule

A Federal Trade Commission rule under which sales of consumer goods or services over $25 made away from the seller’s regular place of business may be canceled within three business days after the sale occurs.

Entered Completely

A term that implies that data or information has been fully inputted into a system or document without omissions.

Risk-Adaptability Analysis

An assessment method used to evaluate the flexibility and responsiveness of a system, organization, or project to potential risks.

Social Consensus

An agreed-upon understanding among members of a society on various issues and norms.