You Are Going to Pay $100 into an Account at the Beginning

question 147

Multiple Choice

You are going to pay $100 into an account at the beginning of each of the next 40 years.At the beginning of the 41st year you buy a 30 year annuity whose first payment comes at the end of the 41st year (the accounts earn 12%) .How much will you receive at the end of the 41st year (i.e.,the first annuity payment) .Round to nearest $100.

• A) $93,000
• B) $7,800
• C) $11,400
• D) $10,700

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Definitions:

Indemnification

A financial agreement in which one party agrees to cover the losses or damages incurred by another.

Entrustment

The transfer of goods to a merchant who ordinarily deals in that type of goods. If the merchant subsequently sells them to a good-faith third-party purchaser, the buyer acquires good title to the goods.

Merchant Authority

The legal ability of a retailer or agent to act on behalf of a business in a way that binds the business.

Void Title

A legal term indicating that a transfer of property or title lacks legal validity or enforceability.