The return provided by a $100 annuity deposited for 10 years that results in a future value of $1,593.74 is 10%.

Question

Quizplus · Accepted Answer

The formula for future value of an annuity is FV = Pmt x [(1 + i)^n - 1]/i, where Pmt is the periodic payment, i is the interest rate per period, and n is the number of periods. In this case, Pmt is $100, n is 10, and FV is $1,593.74. Solving for i gives an interest rate of approximately 10%. Therefore, the return provided by the annuity is 10%.

The Return Provided by a $100 Annuity Deposited for 10