A Donor Agrees to Contribute $5,000 Per Year at the End

question 1

Multiple Choice

A donor agrees to contribute $5,000 per year at the end of each of the next five years to a voluntary health and welfare organization. The donor did not place any use restrictions on the amount pledged. The stream of the payments is discounted at 6 percent. The first payment of $5,000 is received at the end of the first year. The present value factor for a five-payment annuity due on June 30, 20X9, at 6 percent is 4.2124.
-Based on the preceding information,at the end of the first year,the pledge increased unrestricted net assets by:

• A) $25,000.
• B) $21,062.
• C) $4,212.
• D) $5,000.

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Definitions:

Franchise

When one business owner sells to another the right to operate the same business in another location, using its name and operating methods.

Business Owner

A business owner is an individual who owns and oversees the operation of a company, making key decisions and assuming the risks associated with the business.

Original Owner

The individual or entity that first held ownership or possession of an asset, property, or business before any transfers or sales.

Venture

A new business endeavor undertaken with risk in hopes of achieving financial gain or other benefits.