Implied interest rate and period Consider the case of the following annuities, and the need to compute either their expected rate of return or duration. Joshua inherited an annuity worth $6,830.77 from his uncle. The annuity will pay him eight equal payments of $1,100 at the end of each year. The annuity fund is offering a return of ______.

Respuesta :

Answer:

6.00%

Explanation:

Rate of return can be calculated using RATE function in excel or I/Y on calculator or using the formula for annuity

Annuity Rate = RATE(nper=8, pmt=1100, pv=-6,830.77, fv = 0, 0)

Annuity Rate = 0.06000118

Annuity Rate = 6.00%