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?
1 answer:
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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