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An investor was afraid that he would become like King Lear in his retirement and beg...

An investor was afraid that he would become like King Lear in his retirement and beg hospitality from his children, so he purchased grain "tithes," or shares in farm output, for 700 pounds. The tithes paid him 73 pounds per year for 30 years. What interest rate did he receive on this investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Solutions

Expert Solution

Let interest rate be x%

At this rate;present value of annual benefits=700 pounds

700=73/1.0x+73/1.0x^2+..............+73/1.0x^30

Hence x=interest rate=9.8%(Approx)

jeff jeffy answered 2 years ago
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