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You invest in annuity paying $6,000 a year, to receive $300,000, in twenty-seven years. What rate...

You invest in annuity paying $6,000 a year, to receive $300,000, in twenty-seven years. What rate of return will you have earned?

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Answer #1

At around 4.405% future value of annuity payment is equal to 300000.

FV of annuity = P * [ (1+r)^n -1 ]/ r
Periodic payment P=                       6,000
rate of interest r= 4.405%
number of periods n=                             27
FV of annuity = 6000* [ (1+0.04405)^27 -1]/0.04405
FV of annuity =            3,00,000.00

It is calculated with trail and error method.

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