Assume that you own an investment that will pay you $15,000 per year for 12 years, with the first payment today. You need money
today to start a new business, and your uncle offers to give you $120,000 for the investment. If you sell it, what rate of return would your uncle earn on the annuity?
1 answer:
Answer:
the rate of return is 8.41%
Explanation:
given data
Present value = $120,000
Future value = $0
PMT = $15,000
NPER =12 years
solution
We will applied the rate formula that is.
The NPER reflects the time period.
and formula is that
NPER = Rate(NPER;PMT;-PV;FV;type)
so we get here
the rate of return is 8.41%
You might be interested in
Answer:
Note: The full question is attached as picture below
a. Equity income that the investor should report in its income = Net income * Investor share = 400,000 * 30% = $120,000
b. Particulars Amount
Equity investment opening 500,000
Add: Equity income 120,000
Less: Dividend paid <u>60,000</u>
Equity investment at end of year <u>560,000</u>
c. The fair value of the Investee company will remain at adjusted cost. and the investment is not adjusted to fair value
