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12 September, 06:56

Hank made payments of $187 per month at the end of each month for 30 years to purchase a piece of property. He promptly sold it for $172,787. What annual interest rate would he need to earn on an ordinary annuity for a comparable rate of return?

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  1. 12 September, 07:13
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    We are given with

    A = 187 per month

    n = 30 years

    F = 172787

    What is asked is i

    The formula is

    A = Fi / (1 + i) ^n

    Substituting

    187 = 172787 i (1 + i) ^ (30x12)

    Solve for i and convert to effective annual interest rate
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