In 1992, When Sherry Was 56 Years Old with an Additional

question 25

Multiple Choice

In 1992, when Sherry was 56 years old with an additional life expectancy of 20 years, she purchased a single life annuity for $200,000 that was to pay her $15,000 per year for life starting in 1995.Sherry just received her $15,000 payment for 2019.How much of the $15,000 must Sherry include in income?

• A)0
• B)$5,000
• C)$10,000
• D)$15,000

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Definitions:

Breakeven Volume

The number of units that must be sold at a given price to cover all costs, with no profit or loss.

Variable Costs

Costs that change in proportion to the level of output or activity in a business.

Fixed Costs

Rent, salaries, and insurance charges are examples of expenses that are unaffected by changes in production or sales volumes.

EBIT-EPS Analysis

A tool used to study the effect of financing alternatives on a company's earnings per share and taxes.