Solution-Calculate the rate of return on each of the four

Calculate the rate of return on each of the four annuities

Reference no: EM13272779

Joan Collins wishes to choose the best of four immediate-retirement annuities available to her. In each case, in exchange for paying a single premium today, she will receive equal annual end-of-year cash benefits for a specified number of years. She considers the annuities to be equally risky and is not concerned about their differing lives. Her decision will be based solely on the rate of return she will earn on each annuity. The key terms of each of the four annuities are shown in the following table.

Annuity	Premium paid today	Annual benefit	Life in years
A	$20,000	$2,000	20
B	$25,000	$3,400	10
C	$35,000	$4,500	15
D	$50,000	$6,000	12

Calculate the rate of return on each of the four annuities Joan is considering. Given Joan's stated decision criterion, which annuity would you recommend?

Reference no: EM13272779

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Calculate the rate of return on each of the four annuities

Reference no: EM13272779

Reference no: EM13272779

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