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

Question 11

Multiple Choice

For $10,000 you can purchase a 5-year annuity that will pay $2358.65 per year for five years. The payments are made at the beginning 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

Correct Answer:

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