Recall the Application About Opting for a Lump Sum of $500,000

question 79

Multiple Choice

Recall the Application about opting for a lump sum of $500,000 for your retirement or $35,000 per year for the rest of your life to answer the following question(s) .
-If the interest rate is 4 percent, how much interest would the retiree earn the first year if she opted for the lump sum payment, and chose to invest the entire payment at this interest rate?

• A) $1,400
• B) $20,000
• C) $55,000
• D) $235,000

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Definitions:

Stockholders' Equity

The residual assets of a company that belong to shareholders after all liabilities have been subtracted.

Noncurrent Liability

A financial obligation that is not due for settlement within one year of the balance sheet date.

Financing Cash Flow

Cash flow that is related to the company's financing activities, including issuing or buying back shares, dividend payments, and borrowing or repaying debt.