SOLUTION: Use graphical approximation techniques or an equation solver to approximate the desired interest rate. A person makes annual payments of $ 1000 into an ordinary annuity. At the end
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Question 1161452: Use graphical approximation techniques or an equation solver to approximate the desired interest rate. A person makes annual payments of $ 1000 into an ordinary annuity. At the end of 5 years, the amount in the annuity is $ 5666.43. What annual nominal compounding rate has this annuity earned?
Answer by greenestamps(13203) (Show Source): You can put this solution on YOUR website!
The future value formula for payments of $1000 annually for 5 years at interest rate r is
Graph that function and the constant 5666.43 on a graphing calculator and find the intersection.
ANSWER: r = .0626 = 6.26%
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