Thorton Will Receive an Inheritance of $500,000 Three Years from Now

question 44

Multiple Choice

Thorton will receive an inheritance of $500,000 three years from now. Thorton's personal discount rate corresponds to a 10% interest rate compounded semiannually. Which of the following values is closest to the amount that Thorton should accept today for the right to his inheritance?

• A) $373,108
• B) $375,657
• C) $665,500
• D) $670,048

---

Definitions:

Adequacy of Consideration

A legal principle assessing whether what is exchanged in a contract (goods, services, or money) is fair and of sufficient value.

Mistake as to Existence

A legal misunderstanding or error regarding the actual existence of a subject matter or condition of a contract.

Fraudulent Misrepresentation

A false statement made knowingly without belief in its truth or recklessly and without concern for its truth, which induces another party to enter into a contract.

Rescission

The act of cancelling a contract and returning all parties involved to their positions prior to the agreement, effectively nullifying the contract's obligations.