Marshall Has Received an Inheritance and Wants to Invest a Sum

question 7

Multiple Choice

Marshall has received an inheritance and wants to invest a sum of money today that will yield $5,000 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today? (^{PV of $1}, ^{FV of $1}, ^{PVA of $1}, and ^{FVA of $1}) (Use appropriate factor(s) from the tables provided.)

• A) $45,125.00
• B) $100,000.00
• C) $47,500.00
• D) $38,608.50
• E) $50,000.00

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Definitions:

Noncorporate Business

An enterprise that operates for profit but is not legally incorporated; examples include sole proprietorships and partnerships.

Limited Partnership

A business organization with one or more general partners who manage the business and assume legal debts and obligations, and one or more limited partners who are liable only to the extent of their investments.

Dissolved

The process of legally terminating the existence of an entity, such as a corporation or partnership, according to the laws of the jurisdiction in which it is registered.

Capital Contribution

Money, assets, or other resources a partner or shareholder provides to a company or partnership to increase its capital.