Problem:
Your great aunt left you an inheritance in the form of a trust. The trust agreement states that you are to receive $2,400 on the first day of each year, starting immediately and continuing for 20 years.
Required:
Question: What is the value of this inheritance today if the applicable discount rate is 6.75 percent?
- $26,311.16
- $27,677.34
- $24,890.88
- $28,909.29
- $29,333.33
Note: Please provide reasons to support your answer.