You Have Just Turned 27 and May Now Spend a Portion

question 33

Multiple Choice

You have just turned 27 and may now spend a portion of the trust fund your parents established for you.The terms of the trust fund allow you to withdraw 50 beginning-of-the-year cash flows of $40,000 each.An investment firm has offered to pay you cash for all of the fund today.If the rate they use to discount the cash flows is 14% per year,what is their offer price today for your pension fund?

• A)$2,605,750,853
• B)$2000,000.00
• C)$624,915.20
• D)$325,249.13

---

Definitions:

Conditioned Response

A learned response to a previously neutral stimulus that has become associated with a biologically significant stimulus through conditioning.

CS-US Association

The process in classical conditioning whereby a previously neutral stimulus (CS) becomes associated with an unconditioned stimulus (US) to elicit a conditioned response.

Predictability

The extent to which future events or behaviors can be foreseen based on current knowledge or past events.

Private Thought Processes

Private thought processes refer to the internal, mental activities individuals engage in, such as reasoning, reflecting, and planning, which are not observable by others.