You Are Going to Pay $800 into an Account at the Beginning

question 23

Multiple Choice

You are going to pay $800 into an account at the beginning of each of 20 years.The account will then be left to compound for an additional 20 years.At the end of the 41st year you will begin receiving a perpetuity from the account.If the account pays 14%,how much will you receive each year from the perpetuity (round to nearest $1,000) ?

• A)$140,000
• B)$150,000
• C)$160,000
• D)$170,000

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Definitions:

Managerial Accounting

The area of accounting focused on providing financial data and advice to company managers for decision-making purposes.

GAAP

Generally Accepted Accounting Principles encompass a series of standard accounting practices and rules for the creation of financial reports.

Financial Accounting

The field of accounting that focuses on providing information to external users such as investors, creditors, and regulators, primarily through financial statements.

GAAP

A set of widely accepted accounting norms and standards, referred to as Generally Accepted Accounting Principles, for the preparation of financial statements.