An Individual Wants to Receive End-Of-Month Payments of $1,200 for 20

question 17

Multiple Choice

An individual wants to receive end-of-month payments of $1,200 for 20 years after she retires 15 years from now. What lump amount must she invest today to provide the retirement income? Assume the investment earns 7% compounded monthly for the entire 35 years.

• A) $49,864.93
• B) $54,645.42
• C) $54,328.50
• D) $187,835.65
• E) $155,681.89

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Definitions:

Financial Statements

These are formal records of the financial activities and condition of a business, person, or other entity, typically including the balance sheet, income statement, and cash flow statement.

Adjusted Trial Balance

A statement that lists all the account titles and balances of a company after making necessary adjustments but before the preparation of financial statements.

Unearned Revenue

Money received by a business for goods or services yet to be provided; classified as a liability until the service or product is delivered.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to record any unrecorded income or expenses for that period.