Annuity Interest Rate What's the interest rate of a 4-year, annual $1,000 annuity with present value of $3,500?
A) 3.85%
B) 5.56%
C) 8.84%
D) 9.70%

Name: Annuity Interest Rate What's the interest rate of a 4-year, annual $1,000 annuity with present value of $3,500? A) 3.85% B) 5.56% C) 8.84% D) 9.70%
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Question

Quizplus · Accepted Answer

Using the present value of the annuity formula: 
PV = A((1-(1+r)^-n)/r)
3500 = 1000((1-(1+r)^-4)/r)
Solving for r, we get r = 5.56%. Therefore, the interest rate is 5.56%.

Annuity Interest Rate What's the Interest Rate of a 4-Year