Tommy's Grandparents Have Left Him a Trust Fund That Will

question 12

Multiple Choice

Tommy's grandparents have left him a trust fund that will pay him $5,000 a year for twenty years once he turns twenty-one, which is four years from today. Tommy would prefer to have
The cash today for a new car, a new snowboard, a season's ski pass, and various other
Necessities of life. His uncle has offered to pay him a lump sum today in return for the rights to
The trust fund payments. If Tommy can earn an average annual return of 12% on his money,
What is the minimum amount he should expect to receive for the rights to the fund? Round
Your answer to the nearest dollar.

• A)$63,552
• B)$26,583
• C)$23,735
• D)$56,743

Learn how to utilize query criteria effectively to filter data.

Comprehend the process of sorting query results and organizing records.

Understand the use of comparison operators and special characters to refine queries.

Know how to perform field-specific searches and manipulations in database queries.

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Definitions:

Cost Recovery Method

A revenue recognition method where no profit is recognized until the costs of the sold goods or services are fully recovered.

Installment Sales

A method of sale that allows the buyer to make payments over a period of time, while the seller recognizes income as payments are received.

Collectibility

The likelihood or ability of a company to collect payments from customers for goods or services provided, considered when recognizing revenue.

Completed Transaction Method

An accounting method that recognizes revenue and expenses only when a transaction has been completed.