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# Calculating the Rate of Return for Annuities

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Your insurance agent is trying to sell you an annuity that costs \$230,000 today. By buying this annuity, your agent promises that you will receive payments of \$1,225 a month for the next 30 years. What is the rate of return on this investment?

#### Solution Preview

230,000 = 1,225 * (1- [1/30*12/ (1+r/12) / r/12
30 * 12 / 12 - 230,000 = 1,225
Calculator function = PMT FV 1,225 = 4.93%.

We must use a combination of ...

#### Solution Summary

This solution calculates the rate of return on the investment.

\$2.19
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4. You are considering an investment in a project with a life of eight years, an
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