You have deposited $15,584 in a special account that has a guaranteed rate of return. If you withdraw $3,700 at the end of each year for 5 years, you will completely exhaust the balance in the account. The guaranteed rate of return is closest to:
A)6%
B)19%
C)24%
D)4%

Question

Quizplus · Accepted Answer

The problem describes an annuity where you withdraw $3,700 annually for 5 years from an initial deposit of $15,584. To find the rate of return, you can use the present value of annuity formula. Solving for the interest rate that equates the present value of the withdrawals to the initial deposit gives a rate closest to 6%.

You Have Deposited $15,584 in a Special Account That Has