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  3. 14. implied interest rate and period consider the

14. Implied interest rate and period Consider the case of the following annuities, and the...

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Accounting

14. Implied interest rate and period

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

David needed money for some unexpected expenses, so he borrowed $3,695.17 from a friend and agreed to repay the loan in five equal installments of $950 at the end of each year. The agreement is offering an implied interest rate of _____.

Options: 7.83%, 9%, 10.62%, and 12.15%

Davids friend, Keanu, has hired a financial planner for advice on retirement. Considering Keanus current expenses and expected future lifestyle changes, the financial planner has stated that once Keanu crosses a threshold of $7,796,223 in savings, he will have enough money for retirement. Keanu has nothing saved for his retirement yet, so he plans to start depositing $70,000 in a retirement fund at a fixed rate of 9.00% at the end of each year. It will take ____ years for Keanu to reach his retirement goal.

Options:

23.67 years

27.85 years

34.81 years

37.60 years

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