Charles Is the Sole Beneficiary of His Late Uncle's Life

question 134

Multiple Choice

Charles is the sole beneficiary of his late uncle's life insurance policy.The face value of the policy is $785,000.Charles has decided to accept annual annuity payments of $95,000.The interest rate on the policy is 5%.How many annual payments will Charles receive from this policy?

• A)7.08 years worth of payments
• B)8.26 years worth of payments
• C)10.92 years worth of payments
• D)None of the above

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Definitions:

Cost of Merchandise Sold

The total cost incurred to purchase or produce the goods sold by a company during a specific period.

Gross Profit

The financial metric representing the difference between revenue and the cost of goods sold, indicating how efficiently a company is producing its goods.

Cost Flow Assumption

A method of accounting designated to assess inventory worth and calculate the cost of goods sold, which can be either FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Physical Flow of Goods

Refers to the actual movement of goods through the production process to the customer, distinct from the accounting or paper flow.