Which of the following must be known to compute the interest rate paid from financing an asset purchase with an annuity?
A)fair value of the asset purchased,number and dollar amount of the annuity payments
B)present value of the annuity,dollar amount and number of the annuity payments
C)fair value of the asset and timing of the annuity payments
D)future value of the annuity and number of the annuity payments

Question

Quizplus · Accepted Answer

To compute the interest rate paid from financing an asset purchase with an annuity, we need to know the present value of the annuity payments, as well as the dollar amount and number of the annuity payments. The fair value of the asset purchased and the future value of the annuity are not required for this calculation.

Which of the Following Must Be Known to Compute the Interest