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Assume that you own an annuity that will pay you $15,000 per year for 13 years,...

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Finance

Assume that you own an annuity that will pay you $15,000 peryear for 13 years, with the first payment being made today. Youneed money today to start a new business, and your uncle offers togive you $120,000 for the annuity. If you sell it, what rate ofreturn would your uncle earn on his investment?

a. 8.25%

b. 9.45%

c. 10.97%

d. 7.78%

e. 11.07%

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Transcribed Image Text

Assume that you own an annuity that will pay you $15,000 peryear for 13 years, with the first payment being made today. Youneed money today to start a new business, and your uncle offers togive you $120,000 for the annuity. If you sell it, what rate ofreturn would your uncle earn on his investment?a. 8.25%b. 9.45%c. 10.97%d. 7.78%e. 11.07%

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