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

question 133

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

---

Definitions:

Curvilinear Costs

Costs that change with the level of output or activity in a non-linear relationship, displaying variances in the cost per unit at different production volumes.

Break-even Analysis

A calculation that determines when an investment will reach a financial break-even point.

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the level of risk in missing sales projections.

Break-even Sales

The amount of revenue needed to cover total costs, both fixed and variable, indicating the point at which a company neither makes a profit nor incurs a loss.