(Appendix 8A)(Ignore income taxes in this problem. )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

$15, 584 = $3, 700 × Present value of an annuity for 5 years at X%
Present value of an annuity for 5 years at X% = $15, 584 ÷ $3, 700 = 4.212
This present value factor corresponds to a rate of return of 6%.

(Appendix 8A)(Ignore Income Taxes in This Problem