At the age of 55, you want to buy a twenty year-annuity that makes payments of...

At the age of 55, you want to buy a twenty year-annuity that makes payments of $2,500 per month, earning a monthly rate of 1%. Right now, you’ve got $10,000 to invest to save up and buy that annuity. What is the yearly interest rate you would need to earn to achieve your goal?

Please explain the answer, preferably using Excel

Expert Solution

Current age can be any input number in the excel

Assuming the current age to be 20

Assumption of current age can be changed with all formulae remaining the same.
Current Age	20

Amount required at age 55	$227,048.54
Present amount	10000
Rate required to reach the goal	9.33%

Workings and formulae

jeff jeffy answered 3 months ago

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