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Your folks just called and would like some advice from you. An insurance agent just called...

Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchas an annuity for $7,212.44 that will pay them $1,000 per year for 10 years. They dont have the slighest idea what return they would be making on their investment of $7,212.44, What rate of return would they be earning?
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Answer #1
Annual payment for 10 years 1000
Multiply: Annuity pVF at 6.40% for 10 years 7.2226
Present value of Annuity 7222.6
Annuity value 7212.4
Hence, rate of interest is 6.40%
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