Starting on his 25th birthday and continuing through his 60th birthday, Fred deposits $7,400 each year on his birthday into a retirement fund earning an annual effective rate of 5%. Immediately after the last deposit, the accumulated value of the fund is transferred to a fund earning an annual effective rate of j. Five years later, a twenty-five year annuity-due paying $5,800 each month is purchased with the funds. The purchase price of the annuity was determined using an annual effective rate of interest of 2%. Find j. (Round your answer to two decimal places.)
Starting on his 25th birthday and continuing through his 60th birthday, Fred deposits $7,400 each year on his birthday into a retirement fund earning an annual effective rate of 5%. Immediately after the last deposit, the accumulated value of the fund is transferred to a fund earning an annual effective rate of j. Five years later, a twenty-five year annuity-due paying $5,800 each month is purchased with the funds. The purchase price of the annuity was determined using an annual effective rate of interest of 2%. Find j. (Round your answer to two decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Starting on his 25th birthday and continuing through his 60th birthday, Fred deposits $7,400 each year on his birthday into
a retirement fund earning an annual effective rate of 5%. Immediately after the last deposit, the accumulated value of the
fund is transferred to a fund earning an annual effective rate of j. Five years later, a twenty-five year annuity-due paying
$5,800 each month is purchased with the funds. The purchase price of the annuity was determined using an annual
effective rate of interest of 2%. Find j. (Round your answer to two decimal places.)
j=
%
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