The answer is 9%.
Given,
A local bank will pay you $99 a year for your lifetime if you deposit $1,100 in the bank today.
Let the interest rate be 'r'.
Then, Using the short-cut method, we get,
r = (Annuity amount ÷ Annuity paid) × 100
Now, substituting the values in the above formula we get,
r = (99 ÷ 1100) × 100
r = 9%
Hence, in the given scenario where a local bank will pay you $99 a year for your lifetime if you deposit $1,100 in the bank today. If you plan to live forever, what interest rate is the bank paying is 9%.
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