Question

You would like to establish a trust fund to provide $150,000 a year forever for your heirs. The expected rate of return is 4.3 percent. How much money must you deposit today to fund this gift

Answer 1

Answer:

$3,488,372.09

Explanation:

Data provided in the question

Annual income provided per year = $150,000

Expected rate of return = 4.3%

So by considering the above information, the amount of money deposited today is

= Annual income provided per year ÷ Expected rate of return

= $150,000  4.3%

= $3,488,372.09

By dividing the annual income by the expected rate of return we can get the today deposited amount