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In: Finance

C. D. Rom has just given an insurance company $44,500. In return, he will receive an...

C. D. Rom has just given an insurance company $44,500. In return, he will receive an annuity of $6,200 for 20 years.  

At what rate of return must the insurance company invest this $44,500 in order to make the annual payments? Use Appendix D for an approximate answer, but calculate your final answer using the financial calculator method. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Solutions

Expert Solution

PV = 44,500

PMT = -6,200

N = 20

FV = 0

CPT I/Y

I/Y = 12.64

The rate of return = 12.64%

jeff jeffy answered 2 years ago
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