At the End of Every Year for the Next 45

question 99

Multiple Choice

At the end of every year for the next 45 years a trust fund has to pay out $250,000. The money in the fund will be earning 9% compounded annually for the first 25 years and 6% compounded annually for the last 20 years. In order to be able to make these payments, how much money would have to be in the trust fund now?

• A) $2,788,180
• B) $5,323,125
• C) $5,601,917
• D) $7,017,445
• E) $11,125,000

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Definitions:

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe the existing state, a future outcome, or more than one possible outcome.

Interest Groups

Parties or organizations other than direct competitors that have some vested interest in how an organization is managed.

Organizational Effectiveness

A measure of how successfully an organization achieves its goals and objectives.

Resource Dependency

A theory that suggests organizations depend on resources in their environment to survive, which influences their behavior and strategies.