A donor agrees to contribute $5,000 per year at the end of each of the next five years to a voluntary health and welfare organization. The donor did not place any use restrictions on the amount pledged. The stream of the payments is discounted at 6 percent. The first payment of $5,000 is received at the end of the first year. The present value factor for a five-payment annuity due on June 30, 20X9, at 6 percent is 4.2124.
Based on the preceding information, the increase in present value of the contributions receivable recognized at the end of the first year equals:
A) $5,000.
B) $1,264.
C) $4,212.
D) $787.

Question

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The Answer of A donor agrees to contribute $5,000 per year at the end of each of the next five years to a voluntary health and welfare organization. The donor did not place any use restrictions on the amount pledged. The stream of the payments is discounted at 6 percent. The first payment of $5,000 is received at the end of the first year. The present value factor for a five-payment annuity due on June 30, 20X9, at 6 percent is 4.2124.
Based on the preceding information, the increase in present value of the contributions receivable recognized at the end of the first year equals:
A) $5,000.
B) $1,264.
C) $4,212.
D) $787.

A Donor Agrees to Contribute $5,000 Per Year at the End