Assume That You Own an Annuity That Will Pay You

question 60

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 $156,000 for the annuity.If you sell it,what rate of return would your uncle earn on his investment?

• A) 3.31%
• B) 2.77%
• C) 2.42%
• D) 2.72%
• E) 2.15%

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Definitions:

Small Band Stride

A style of jazz piano playing characterized by a left-hand technique that creates a rhythmic stride pattern, often performed by small bands or solo pianists.

Batouala

A novel by René Maran, notable for its critical portrayal of colonialism in Africa; it was awarded the Prix Goncourt in 1921.

Harlem Renaissance

A cultural, social, and artistic explosion centered in Harlem, New York, during the 1920s, marking a period of rich cultural growth among African Americans.

René Maran

A French writer of Guyanese descent who won the 1921 Goncourt Prize for his novel "Batouala," a pioneering work that represented a significant breakthrough in representing African culture and critiques of colonialism.