Fidelity Mutual (an insurance company) has offered you a single premium annuity that will pay you $12,000 at the end of each year for the next 15 years. If you must pay $109,296 today for this annuity, what is your expected rate of return?

Question

jordanmjdmary jordanmjdmary

18-02-2017
Business

contestada

Fidelity Mutual (an insurance company) has offered you a single premium annuity that will pay you $12,000 at the end of each year for the next 15 years. If you must pay $109,296 today for this annuity, what is your expected rate of return?

Respuesta :

Otras preguntas

Solve 8x - 2y = 0 and -6x + 14y = 50 using elimination. Show steps. Put your answer in coordinate form (x,y)

Ariane borrow $500 on a 3−year loan. She i charged 5% imple interet per year. How much interet i he charged for 3 year? What i the total amount he ha to pay bac

What effect did zebulon pike have on american settlement? he led settlers into what is now the pacific northwest. he helped establish the wilderness road in t

It costs a craftsperson 110 to bring 150 picture frames to market and the picture frames sell for 2. The difference between the cost and the income from sales i

Why did James Madison support the Constitution? Responses It encouraged factions, which led to more debate and discussion. It kept the minority factions from

Which best states a comparison of the tones used in these excerpts? both excerpts are negative, but the second excerpt has a more negative tone. Both excerpts a

Given the following information, calculate the product cot per unit. Direct material = $28,000 Direct labor = $42,000. Overhead application rate = $15 per direc

What do public opinion researchers analyze to estimate the opinions of large populations?.

Commercial methods for making fatty acid methyl esters (FAMEs): • Base-catalyzed transesterification of the oil with ________________.

A gram i a unit of meaure ued in medication order and precription, and i abbreviated a

MissPhiladelphia MissPhiladelphia · Answer 1 · 2017-03-04T12:21:11+01:00

Given:
Initial Investment = 109,296
annual return = 12,000 for 15 years.

Usually the expected rate of return uses rates in percentage form. ERR is calculated by taking the average of the probability distribution of all possible returns.
However, based on the given figures, I think the best formula for this would be the accounting rate of return.

ARR = Average Accounting Profit / Average Investment
ARR = 12,000 / 109,296
ARR = 0.10979
ARR = 0.10979 100% = 10.979 or 10.98%

The expected rate of return is 10.98%