Question

Your fairy godmother is amazing in so many ways, but she needs help with her finance skills. She promised to give you $1000 a month forever. She is setting aside $100,000 today to fund this. What APR must she consistently earn to keep this promise without adding additional funds along the way?

Use at least 4 decimals at all times. Enter answer as a decimal (5% would be entered as 0.0500).

Answer 1

Let APR = r

Hence,

1000 = 100000 곪

which gives us,

r=0.01 * 12 = 0.1200 = 12.0000%

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