What is the interest rate of a 8 year, annual $3,000 annuity with present value of...

Question

Question

What is the interest rate of a 8 year, annual $3,000 annuity with present value of $16,500? 9.17 percent 5.64 percent 11.32 percent 7.69 percent

Answer 1

Answer #1

Let interest rate be x%

At this rate;present value of annuity=16,500

16,500=3000/1.0x+3000/1.0x^2+3000/1.0x^3+..............+3000/1.0x^8

Hence x= interest rate=9.17%(Approx).

Answer 2

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