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12 October, 06:41

What's the interest rate of a seven-year, annual $4,000 annuity with present value of $20,000?

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  1. 12 October, 07:57
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    The interest rate is : 9.20%

    Explanation:

    PV = PMT * [ (1 - (1+r) ^-n) / r]

    Annuity Value = Payment Amount x Present Value of an Annuity (PVOA) factor

    $20,000 = $4,000 x [ (1 - (1+r) ^-7) / r]
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