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In: Finance

Your folks just called and would like some advice from you. An insurance agent just called...

Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for ​$21,320.41 that will pay them ​$2,000 per year for 20 years. They​ don't have the slightest idea what return they would be making on their investment of ​$21,320.41. What rate of return would they be​ earning?

The annual rate of return your folks would be earning on their investment is nothing​%.

​

Solutions

Expert Solution

The annual rate of return your folks would be earning on their investment (using excel function RATE)

=RATE(nper,pmt,pv,fv)

=RATE(20,2000,-21320.41,0)=6.92%

jeff jeffy answered 2 years ago
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