Ask Question
18 December, 18:23

g What's the interest rate of a 5-year, annual $4,900 annuity with present value of $20,000? (Use a time value of money calculator or a spreadsheet. Round your answer to 2 decimal places.)

+2
Answers (1)
  1. 18 December, 18:40
    0
    Interest rate of annuity is 7.17%

    Explanation:

    A fix Payment for a specified period of time is called annuity. The discounting of these payment on a specified rate is known as present value of annuity.

    Formula for Present value of annuity is as follow

    PV of annuity = P x [ (1 - (1 + r) ^-n) / r ]

    $20,000 = $4,900 x [ (1 - (1 + r) ^-5) / r ]

    r = 7.17%

    Interest rate is 7.17%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “g What's the interest rate of a 5-year, annual $4,900 annuity with present value of $20,000? (Use a time value of money calculator or a ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers