You have deposited $24,764 in a special account that has a guaranteed rate of return. If you withdraw $4,300 at the end of each year for 9 years, you will completely exhaust the balance in the account. The guaranteed rate of return is closest to: (Ignore income taxes.) Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. (Round your intermediate calculations to 3 decimal places.)
A) 6%
B) 10%
C) 17%
D) 56%

Question

Quizplus · Accepted Answer

$24,764 = $4,300 × Present value of an annuity for 9 years at X%
Present value of an annuity for 9 years at X% = $24,764 ÷ $4,300 = 5.759
This present value factor corresponds to a rate of return of 10%.

You Have Deposited $24,764 in a Special Account That Has