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Implied interest rate and period Consider the case of the following annuities, and the need to compute either their expected rate of return or duration. Joshua inherited an annuity worth $6,830.77 from
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Implied interest rate and period Consider the case of the following annuities, and the need to compute either their expected rate of return or duration. Joshua inherited an annuity worth $6,830.77 from his uncle. The annuity will pay him eight equal payments of $1,100 at the end of each year. The annuity fund is offering a return of ______.

User Saeid Farivar
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1 Answer

1 vote

Answer:

6.00%

Step-by-step explanation:

Rate of return can be calculated using RATE function in excel or I/Y on calculator or using the formula for annuity

Annuity Rate = RATE(nper=8, pmt=1100, pv=-6,830.77, fv = 0, 0)

Annuity Rate = 0.06000118

Annuity Rate = 6.00%

User Adamconkey
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