Your Great Aunt Left You an Inheritance in the Form

question 116

Multiple Choice

Your great aunt left you an inheritance in the form of a trust.The trust agreement states that you are to receive $2,400 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)$24,890.88
• B)$26,311.16
• C)$27,677.34
• D)$28,909.29
• E)$29,333.33

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Definitions:

Income Distribution

The way in which a nation’s total GDP is distributed amongst its population, affecting the economic well-being of its citizens.

Official Poverty Line

A threshold set by the government defining the minimum level of income sufficient to cover basic living expenses, used to identify individuals or households in poverty.

Federal Government

The national government of a federal state, which holds the authority over matters that affect the entire country, distinct from state or local governments.

Percentage Point

A unit for measuring the difference between percentages, illustrating how much one percentage is higher or lower than another.