With $15 Million in an Account Expected to Earn 8 Percent

question 102

Multiple Choice

With $1.5 million in an account expected to earn 8 percent annually over the retiree's 30 years of life expectancy, what annual annuity can be withdrawn, beginning today?

• A)$112,150
• B)$120,000
• C)$123,371
• D)$133,241 $1,500,000 = pmt

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Definitions:

Fixed Costs

Expenditures on items like rent, salaries, and insurance that stay fixed, irrespective of production or sales figures.

Contribution Margin Ratio

A financial metric that calculates the percentage of sales revenue that exceeds variable costs, contributing toward fixed costs and profit.

Break-Even Point

The break-even point is the point at which total costs and total revenue are equal, resulting in no net loss or gain, and is used for analyzing the financial viability of a product or service.

Pretax Income

The amount of income earned by a business before the deduction of taxes; it is found by subtracting all expenses, except tax expenses, from revenues.