A Man Received a Separation Payment of $98 000

question 51

Essay

A man received a separation payment of $98 000.00 at age 56. He invested that sum of money at 8.5% compounded semi-annually until he was 65. At that time he converted the existing balance into an ordinary annuity paying $6150.00 every 6 months, with interest at 5% compounded semi-annually. How many payments will be made?

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Definitions:

Equity

Equity represents the ownership value held in an asset or a business by its shareholders or owners, calculated as the difference between the value of the assets and the value of the liabilities.

Net Income

The total earnings of a company after subtracting all expenses, including taxes, from its total revenues.

Investing Activities

Transactions and events related to the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

Acquiring And Disposing

The processes involved in obtaining and getting rid of assets, including purchasing or receiving assets and selling or disposing of them.