Your Great Aunt Left You an Inheritance in the Form

question 14

Multiple Choice

Your great aunt left you an inheritance in the form of a trust. The trust agreement states that you are to receive $3,600 on the first day of each year, starting immediately and continuing for 20 years. What is the value of this inheritance today if the applicable discount rate is 6.75 percent?

• A)$38,890.88
• B)$40,311.16
• C)$41,516.01
• D)$42,909.29
• E)$43,333.33

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Definitions:

Dependent Variable

A variable in an experiment or model whose value depends on the values of one or more independent variables.

Predicting

The act of forecasting future events or trends based on current or historical data analysis.

Systemic Risks

Risks that can cause a collapse of an entire financial system or market, as opposed to risks associated with individual entities.

Beta

A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.