Question

An investor was afraid that he would become like King Lear in his retirement and beg hospitality from his children, so he purchased grain "tithes," or shares in farm output, for 700 pounds. The tithes paid him 73 pounds per year for 30 years.

What interest rate did the he receive on this investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

Present Value of "tithes'' purchased are 700 pounds

Periodic Payment will be paid to him per year is 73 pounds for 30 years

Calculate the Interest rate earned on Investment using Excel "rate" function:-

So, interest rate he receive on this investment is 9.80%

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