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

question 21

Multiple Choice

For $10,000,you can purchase a five-year annuity that will pay $2,358.65 per year for five years.The payments occur at the beginning of each year.Calculate the effective annual interest rate implied by this arrangement.

• A)8%
• B)9%
• C)10%

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Definitions:

Internal Control

Procedures and processes implemented by a business to safeguard assets, ensure accurate and reliable financial reporting, and promote compliance with laws and regulations.

Sarbanes-Oxley

A U.S. law enacted to protect investors by improving the accuracy and reliability of corporate disclosures.

Public Confidence

is the trust and belief the general public holds in the stability and integrity of institutions, markets, and systems.

Petty Cash Fund

A small amount of cash kept on hand to pay for minor, incidental expenses.