Danny invests $124 090 in a fund and expects to receive $10 000 per year for the next 30 years.What is the approximate interest rate provided on the annuity?
A)8 percent
B)6 percent
C)9 percent
D)7 percent

Question

Quizplus · Accepted Answer

The interest rate can be calculated using the formula for the present value of an annuity. Solving for the interest rate that equates the present value of $10,000 per year for 30 years to $124,090 gives approximately 7 percent.

Danny Invests $124 090 in a Fund and Expects to Receive