In: Finance
C. D. Rom has just given an insurance company $32,500. In
return, he will receive an annuity of $3,800 for 20
years.
At what rate of return must the insurance company invest this
$32,500 in order to make the annual payments? (Do not round
intermediate calculations. Round your final answer to 2 decimal
places.)
Rate of Return ____________ %
Present Value = $32,500
Annual Payment = $3,800
Time Period = 20 years
Calculating Interest Rate,
Using TVM Calculation,
I = [PV = 32,500, FV = 0, PMT = 3,800, T = 20]
I = 9.93%