Question

(Solving for r with annuities) Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent, who believes that Nicki is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as follows in the popup window: If Nicki could eam 12 percent on her money by placing it in a savings account, should she place it instead in any of the annuities? Which ones, forvy? Why? a. What rate of return could Nicki earn on her money if she place it in annuity A with $7.000 payment per year and 16 years duration? % (Round to two decimal places) Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) INITIAL PAYMENT INTO ANNUITY (ATE=0) $50,000 $50,000 $40,000 ANNUITY AMOUNT OF MONEY RECEIVED PER YEAR $7,000 $7,500 $6,500 DURATION OF ANNUITY (YEARS) 12 Done Enter your answer in the nur boy and

Answer 1

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? v 1x 03:25 ENG 25-02-207025 X N338 L M N O P Q R S T U V 323 328 ANNUITY 329 INITIAL PAYMENT 50000 50000 40000 ANNUAL DURATION OF RECEIPT ANNUITY 7000 16 7500 6500 RATE OF RETURN 11.57% 10.45% 9.96% 330 (=RATE(Q329,-P329,0329)] (=RATE(Q330,-P330,0330)] (=RATE(Q331,-P331,0331)] 331 10 332 333 334 335 NONE BECAUSE NONE OF THE ANNUITY HAS RETURN MORE THAN 12% 336 337 338 339 340 341 344 345 346 ... 53 STATE 56 57 58 59 54 MORTGAGE 51 55 52 511 512 513 314 315 316 317F 51 5186 S111 Sheet1 Sheet2 Sheet3 Sh... →