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Title: Hank made payments of $162 per month at the end of each month for 30 years to purchase a piece of pr Post by: Catracho on Dec 7, 2018 Hank made payments of $162 per month at the end of each month for 30 years to purchase a piece of property. He promptly sold it for $151,678. What annual interest rate would he need to earn on an ordinary annuity for a comparable rate of return?
Hank would need an annual interest rate of %.? (Round to the nearest hundredth as needed.) Title: Re: Hank made payments of $162 per month at the end of each month for 30 years to purchase a piece o Post by: bio_man on Dec 7, 2018 Again, use the annuity formula:
\(\frac{162\left[(1+i)^{30\times 12}-1\right]}{i}=151678\) Simplify a little bit: \(\frac{(1+i)^{30\times 12}-1}{i}=\frac{151678}{162}\) After solving for \(i\) via whatever method you're comfortable with (I chose graphing), you should get 0.005, and as a percent, that's 0.50% interest. |