You are offered an annuity that will pay $12,000 a year for eight years (that is, eight payments), but the payments start after six years have elapsed. If you want to earn 7 percent on your funds, what is the maximum you should pay for this annuity? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.