Question

A local bank’s advertising reads: "Give us $45,000 today, and we’ll pay you $800 every year forever." If you plan to live forever, what annual interest rate will you earn on your deposit?

Answer 1

1.78%

Step-by-step explanation:

The computation of the annual interest rate earn is shown below:

= Every year payment ÷ Present value × 100

= $800 ÷ $45,000 × 100

= 1.78%

We simply divide the every year payment by the present value so that the correct annual interest rate can come

So, we consider all the information which is given in the question