Hi, the question reads as follows: "A loan of $10,000 is being repaid with payments of $1000 at the end of each year for 20 years. If each payment is immediately reinvested at 5% effective, find the effective annual rate of interest earned over the 20year period." I tried to work this problem out using accumulated values, but I am at a deadend, does anyone have any advice? The answer is 6.16%
Sponsored Ads
Pauline Reimer, ASA, MAAA Pryor Associates Actuarial Openings: Life, P&C, Health, Pensions, Finance 
Ezra Penland Actuarial Recruiters Top Actuary Jobs Salary Surveys Apply Bios Casualty Health Life Pension 
Banner Ad 1
Collapse
Announcement
Collapse
No announcement yet.
Yield Rates Kellison Chapter 5.4 #11
Collapse
X

Originally posted by CalloftheBladeHi, the question reads as follows: "A loan of $10,000 is being repaid with payments of $1000 at the end of each year for 20 years. If each payment is immediately reinvested at 5% effective, find the effective annual rate of interest earned over the 20year period." I tried to work this problem out using accumulated values, but I am at a deadend, does anyone have any advice? The answer is 6.16%
10,000(1+i)^20 = 33,065.95
Solve for i.
Arnold

Originally posted by Arnold KimThe accumulated value of $1,000/year for 20 years is 33,065.95.
10,000(1+i)^20 = 33,065.95
Solve for i.
Arnold
Comment
Comment