Question

Fannie has a life insurance policy that will pay her family $24,000 per year if

she dies. Fannie's insurance company expects that it would have to put
$1,200,000 into a bank account so that it could make the payments. What
does Fannie's insurance company expect the interest rate to be?​

Answer 1

2%

Explanation:

Answer 2

The rate is 2% per year.

Explanation:

It is given that sum to be $1200000.

The interest per year to be received is $24000.

Let the rate of interest be "r".

The amount interest is given by the formula,

`(Interest) = (Principle amount)((Rate)/(100))(Time)`

`24000 = (1200000)((r)/(100))(1)`

`r = (24000)/(12000) = 2`

Thus the rate of interest is given by 2% per year.