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5 months ago
 Hank made payments of $162 per month at the end of each month for 30 years to purchase a piece of pr 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.) Read 93 times 1 Reply
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Educator
5 months ago
 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.
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