Henry Rearden Is Saving for Retirement and Has Determined That

question 16

Multiple Choice

Henry Rearden is saving for retirement and has determined that to live comfortably he must save $3 million by his 65th birthday.Henry just turned 30 today,and he has decided that starting today and continuing on every birthday up to and including his 65th birthday,he will deposit the same amount into an individual retirement account (IRA) .If Henry can earn 8% on his IRA,then the amount he must set aside each year to make sure that he will have $3 million in his account on his 65th birthday is closest to:

• A)$16,035.
• B)$17,410.
• C)$83,335.
• D)$85,715.

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Definitions:

Net Cash

The amount of cash available after accounting for cash inflows and outflows.

Financing Activities

Actions that result in changes in the size and composition of the equity capital or borrowings of the entity, as reflected in the company's cash flow statement.

Operating Activities

Day-to-day actions that are involved in running a business, such as selling products, managing expenses, and paying employees.

Accounts Receivables

Assets of a business representing money owed by customers for goods or services that have been delivered but not yet paid for.