Suppose that an insurance company offers to pay you an annuity of $5,000 per year for...

Suppose that an insurance company offers to pay you an annuity of $5,000 per year for 5 years in exchange for $16,000 today. What is the return in this investment measured in percentage terms ? ( This is an ordinary annuity. Round to two decimal places. )

Expert Solution

Value of Annuity			16000
Divide: Annual amount			5000
Annuity PVF factor for 5 yrs			3.2

Rate of which it arrives			17%

Return on ivnestment = 17%

jeff jeffy answered 2 years ago

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