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$10,000 is used to purchase an appropriate size annuity that has level annual payments for 14 years. The price of the annuity is based on an effective annual rate of 10.4%. As each payment is received, it is put into a fund that earns an effective annual rate of 4.2%. (b) If the $10,000 were put into a fund that was to produce the same final value after 14 years, what annual effective rate would that fund have to offer?

$10,000 is used to purchase an appropriate size annuity that has level annual payments for 14 years. The price of the annuity is based on an effective annual rate of 10.4%. As each payment is received, it is put into a fund that earns an effective annual rate of 4.2%. (b) If the $10,000 were put into a fund that was to produce the same final value after 14 years, what annual effective rate would that fund have to offer?

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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$10,000 is used to purchase an appropriate size annuity that has level annual payments for 14 years. The price of the annuity is based on an effective annual rate of 10.4%. As each payment is received, it is put into a fund that earns an effective annual rate of 4.2%. (b) If the $10,000 were put into a fund that was to produce the same final value after 14 years, what annual effective rate would that fund have to offer?
Transcribed Image Text:$10,000 is used to purchase an appropriate size annuity that has level annual payments for 14 years. The price of the annuity is based on an effective annual rate of 10.4%. As each payment is received, it is put into a fund that earns an effective annual rate of 4.2%. (b) If the $10,000 were put into a fund that was to produce the same final value after 14 years, what annual effective rate would that fund have to offer?
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