Your Parents Set Up a Trust for You That You

question 125

Multiple Choice

Your parents set up a trust for you that you will not have access to until your 30th birthday,which is exactly 9 years from today.By prior arrangement,the trust will be worth exactly $200,000 on your 30th birthday.You need cash today and are willing to sell the rights to that trust today for a set amount.If the discount rate for such a cash flow is 12%,what is the maximum amount that someone should be willing to pay you today for the rights to the trust on your 30th birthday?

• A) $72,122.01
• B) $178,571.43
• C) $224,000.00
• D) $225,000.00

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Definitions:

Competencies

A combination of skills, abilities, and knowledge that enables a person to perform a specific task or role effectively.

Self-regulatory Plans

Strategies individuals create and implement to guide their behavior towards achieving personal goals.

Cognitive-affective Variable

Factors related to cognitive and emotional processes that can influence an individual's behavior and decision-making.

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In psychology, abstract ideas or concepts that are deliberately used to understand and explain patterns of behavior and thought.