Recall the Application about opting for a lump sum of $500,000 for your retirement or $35,000 per year for the rest of your life to answer the following question(s).
-If the interest rate is 4 percent, how much interest would the retiree earn the first year if she opted for the lump sum payment, and chose to invest the entire payment at this interest rate?
A) $1,400
B) $20,000
C) $55,000
D) $235,000

Question

Quizplus · Accepted Answer

The interest earned in the first year on a lump sum of $500,000 invested at an interest rate of 4 percent is calculated as $500,000 * 0.04 = $20,000.

Recall the Application About Opting for a Lump Sum of $500,000