Your insurance agent is trying to sell you an annuity that costs $65,000 today. By buying...
Your insurance agent is trying to sell you an annuity that costs $65,000 today. By buying this annuity, your agent promises that you will receive payments of $345 per month for 25 years. What is the rate of return expressed as an APR on this investment?
Homework Answers
using excel rate function
Interest per period = RATE(number_of_periods, payment_per_period, present_value, [future_value], [end_or_beginning], [rate_guess])
= RATE(25*12,345,-65000)
= 0.33775%
APR = interest rate period * number of periods
= 0.33775% * 12
= 4.05%
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