Roy, Who Has Just Turned 40, Would Like to Have

question 69

Multiple Choice

Roy, who has just turned 40, would like to have an annual annuity of $20,000 paid over a 20-year period, the first payment occurring on his 66th birthday. How much must Roy save each year (end of year) for the next 25 years to have this annuity, if the investment will earn 12 percent compounded annually?

• A) $16,000
• B) $19,046
• C) $1,120
• D) $944.10

---

Definitions:

Administrative Costs

Expenses related to the general operation of a business, including salaries of executive officers, legal and clerical work, and office supplies.

Maintenance Expenses

Costs incurred to keep an asset in working condition or to maintain its operational efficiency.

Utilities

Services provided to the public, including electricity, gas, water, and sewage services, typically requiring payment.

Generates Revenues

Activities or assets within an organization that contribute to earning income from sales of goods or services.