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

Multiple Choice

For $10,000, you can purchase a five-year annuity that will pay $2,358.65 per year for five years. The payments occur at the beginning of each year. Calculate the effective annual interest rate implied by this arrangement.

A) 8 percent
B) 9 percent
C) 10 percent
D) 11 percent