Donations. A page from Foresight from the Art Institute of Chicago is attached. It describes the details of a charitable gift annuity. Consider the figures for a one-person annuity. For example, a 55-year old donor would receive an annual payment equal to 6.7% of the donation for the rest of the donor's life. Older donors would receive higher annual payments (they are expected to collect fewer payments). The interest rate is 5%. Ignore taxes. Consider a 55-year old donor who will live for 20 more years (and receive 20 annuity payments). Suppose the donor gives a $1,000,000 charitable gift annuity to the Art Institute. (a) What is the value of the gift to the Art Institute? (b) How long would the donor have to live for the donation to become a gift from the Art Institute to the donor? Need complete details around solution.

FORESIGHT THE ART INSTITUTE OF CHICAGO Information and A GIFT THAT GIVES YOU SECURITY ideas about estate and gift planning. tink of all the safety precautions you take day in and day a beneficiary to share equaly in the income while you both are out. If you're driving anywhere, you wear your seat belt, alive or to receive the income after you de. That person will with other mation Maybe you keep a first aid kit in the medicine cabinet, also receive lifetime payments if needed. The rates of return of interest just in case you need it. Before you tum in for the night, you lock the doors. All of these little things show you're protecting are sightly lower for two people of similar ages: yourself. ACES RATE 65/50 6.7% Protecting your finances is no different. If you're going to 65/65 invest your money, you want to know that you can count on 706 69% the income from your investments. The catch is that the more 7070 7.19 secure an investment, the lower the return. To get a high 7570 7.25% yield, the trade-off is high risk. Shouldn't there be a safer way? 750 7.5%% 8075 7 85 There is, if you'd like to eventually make a gift to the Art 85/80 Institute. It's called a charitable gift annuity. 9185 9.89% Charitable gift annuities are attractive GUARANTEED LIFETIME INCOME because you know that every year you're guar- A chantable gift annuity is an agreement between you and the anteed the same amount institution you wish to support. You agree to give the institu- of money, no matter how tion money or stock. They invest it and agree to pay you a set the investments come out, percentage of it every year for the rest of your life. There's nothing more secure than that! The percentage you receive as lifetime income depends on your age at the time of the gift. The older you are, the higher your rate is. Take a look at these examples: TAX BENEFITS AGE 50 RATE 659% A steady income isn't your only 55 advantage, however. In the 6.7% year you establish the charita- 60 6.9% ble gift annuity, you receive 65 7 2% an income tax deduction 70 7.79% for the value that is 75 80 84% 9.4% expected to remain for charity. This deduction 10.5% means a smaller income 90 & over 12 036 Lax bill for you Another good thing about the chantable gift annuity is that someone else you choose can benefit, too. You can name WINTER 1998