George buys an immediate annuity at a price that gives him a yield of i effective per annum. The annuity pays $1,000 per annum for 18 years. Just after he receives the 5th payment, George decides to sell the remaining payments to Liz at a price that will yield Liz 3.75% effective per annum. George’s yield rate over the 5-year period is 5.92%. Determine i. Show Solution.

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