Matthew Earns $10 000 Per Month for the Next 25

question 26

Multiple Choice

Matthew earns $10 000 per month for the next 25 years,after which he retires.During the first five years of retirement,he withdraws $6000 at the start of each month,after which he dies.His son,Sean,inherits the remainder of Matthew's savings.It is further stipulated in Matthew's will that Sean will be paid the money in equal payments at the start of every month,for the next 20 years.Given a fixed interest rate of 9% p.a. ,calculate the amount of the monthly payments that Sean receives.

• A)$98 250
• B)$97 340
• C)$98 270
• D)$97 519

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Definitions:

Time Value

The concept that money available today is worth more than the same amount in the future due to its potential earning capacity, often used in evaluating investment opportunities.

Inventory Control

The process of managing inventory levels, orders, sales, and deliveries to ensure the right quantity of stock is available at the right time.

Sales Rise

An increase in the amount of products or services sold by a business within a specific period.

Safety Stock

An inventory buffer to prevent stockouts, typically held to account for variability in demand or supply.