For $10,000 You Can Purchase a 5-Year Annuity That Will

Multiple Choice

For $10,000 you can purchase a 5-year annuity that will pay $2504.57 per year for five years. The payments are made at the end of each year. Calculate the effective annual interest rate implied by this arrangement: (approximately)

A) 8%
B) 9%
C) 10%
D) None of the above