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James inherited an annuity worth $4653.59 from his uncle. The annuity will pay him six equal payments of $1,100 at the end of each year. The annuity fund is offering a return of_______.

a)9.5%
B) 12.98%
c) 14.85%
d) 11%

Respuesta :

Answer:

d) 11%

Explanation:

In order to compute the rate of return, we have to use the RATE formula which is presented in the attachment below:

Given that,  

Present value = $4,653.59

Future value or Face value = $0

PMT = $1,100

NPER = 6 annual payments

The formula is shown below:  

= Rate(NPER,PMT,-PV,FV,type)  

The present value come in negative  

So, after solving this,  the rate is 11%

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