Question

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

Answer 1

Answer:

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]