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kotykmax [81]
3 years ago
9

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?

Business
1 answer:
vlabodo [156]3 years ago
8 0

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%

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