A $255,000 Amount from an RRSP Is Used to Purchase

question 178

Essay

A $255,000 amount from an RRSP is used to purchase an annuity paying $6,000 at the end of each quarter. The annuity provides an annually compounded rate of return of 6%.
a) What will be the amount of the final payment?
b) What will be the interest portion of the 27^th payment?
c) What will be the principal portion of the 53^rd payment?
d) How much will the principal balance be reduced by Payments 14 to 20 inclusive?
e) How much interest will be paid by the payments received in the 6^th year?

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Definitions:

Goods Transferred

The process of moving goods from one location to another, often referring to the change in ownership of inventory from seller to buyer.

Refund Liability

Refund Liability is an obligation arising from the potential need to repay customers for returned or unsatisfactory goods and services.

Merchandise Returns

Goods that are returned to the seller from the buyer, generally due to defects, dissatisfaction, or the wrong items being delivered.

Sales

The total amount of goods or services sold by a company during a specific period, often used as a measure of business performance.