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

Question

Quizplus · Accepted Answer

The approximate rate of return 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 a rate close to 7 percent.

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