Your parents would like to establish a trust fund that would pay annual payments to you and your heirs of $500,000 a year forever. How much do your parents need to deposit into this trust fund today to achieve their goal if the fund can earn 7% interest?

Your parents would like to establish a trust fund that would pay annual payments to you and your heirs of $500,000 a year forever. How much do your parents need to deposit into this trust fund today to achieve their goal if the fund can earn 7% interest?

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter27: Time Value Of Money (compound)

Section: Chapter Questions

Problem 10E

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Concept explainers

Reasons for Estate Planning

Planning is a process that helps decide in advance about future activities and operations. Planning helps to draft the procedures by identifying, analyzing, and designing how to work, when to work, by whom should be done, and what has to be done. It is the primary step followed by a person, business organizations, institutions, companies, etc.

Question

Your parents would like to establish a trust
fund that would pay annual payments to you
and your heirs of $500,000 a year forever.
How much do your parents need to deposit
into this trust fund today to achieve their goal if
the fund can earn 7% interest?

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