Assume That You Own an Annuity That Will Pay You

question 99

Multiple Choice

Assume that you own an annuity that will pay you $15,000 per year for 12 years,with the first payment being made today.You need money today to start a new business,and your uncle offers to give you $120,000 for the annuity.If you sell it,what rate of return would your uncle earn on his investment?

• A)6.85%
• B)7.21%
• C)7.59%
• D)7.99%
• E)8.41%

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Definitions:

Facility Expenses

Costs associated with operating and maintaining physical buildings or structures used in the production of goods or services.

Spending Variance

The difference between the actual amount spent and the budgeted or expected amount, which can be favorable or unfavorable.

Tenant-Days

A measure used in hospitality and property management to calculate the total number of days that tenants or guests occupy a space over a certain period.

Net Operating Income

The profit generated from a company's core business operations, excluding deductions of interest and taxes.