You Would Like to Establish a Trust Fund That Will

question 112

Multiple Choice

You would like to establish a trust fund that will provide $50,000 a year forever for your heirs.The trust fund is going to be invested very conservatively so the expected rate of return is only 2.75 percent.How much money must you deposit today to fund this gift for your heirs?

• A)$1,333,333.33
• B)$1,375,000.00
• C)$1,425,000.00
• D)$1,666,666.67
• E)$1,818,181.82

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Definitions:

Return On Total Assets

A financial ratio that indicates how effectively a company is using its assets to generate profit, measured by dividing net income by total assets.

Earnings Per Share

This is a financial ratio that measures the amount of net income earned per share of stock owned.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in generating sales from its assets, calculated by dividing total revenue by average total assets.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in utilizing its assets to generate sales or income, calculated by dividing net sales by the average total assets.