You Have Just Turned 25 and May Now Spend a Portion

question 2

Multiple Choice

You have just turned 25 and may now spend a portion of the trust fund your parents established for you.The terms of the trust fund allow you to withdraw 60 beginning-of-the-year cash flows of $100,000 each.An investment firm has offered to pay you cash for all of the fund today.If the rate they use to discount the cash flows is 16% per year,what is their offer price today for your pension fund?

• A)$4,605,750,853
• B)$6,000,000.00
• C)$624,915.20
• D)$724,901.63

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Definitions:

Distorted Surface

A surface that has been altered or deformed from its original shape, often due to external forces.

Distorted Line

A line that does not follow a straight path due to deformation, often used to describe anomalies in structures or diagrams.

Reference Dimension

A non-critical dimension provided for information only and does not govern production or inspection processes.