For $10,000, You Can Purchase a Five-Year Annuity That Will

question 67

Multiple Choice

For $10,000, you can purchase a five-year annuity that will pay $2,504.57 per year for five years. The payments occur at the end of each year. Calculate the effective annual interest rate implied by this arrangement.

• A)8 percent
• B)9 percent
• C)10 percent
• D)11 percent

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