Business, 27.05.2020 10:58 nook4boo

Consider the case of the following annuities, and the need to compute either their expected rate of return or duration.
1. Matthew needed money for some unexpected expenses, so he borrowed $2,587.09 from a friend and agreed to repay the loan in three equal installments of $950 at the end of each year. The agreement is offering an implied interest rate of ___.
2. Matthew’s friend, Gregory, has hired a financial planner for advice on retirement. Considering Gregory’s current expenses and expected future lifestyle changes, the financial planner has stated that once Gregory crosses a threshold of $920,925 in savings, he will have enough money for retirement. Gregory has nothing saved for his retirement yet, so he plans to start depositing $40,000 in a retirement fund at a fixed rate of 5.00% at the end of each year. It will take for Gregory to reach his retirement goal.

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Consider the case of the following annuities, and the need to compute either their expected rate of...

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