Assume That You Own an Annuity That Will Pay You

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 open a new restaurant, 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%