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Rate of Return

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Joe Nautilus has 120,000 and wants to retire. What return must his money earn so he can receive annual benefits of 20,000 for the next 14 years. A)12%, B)Between 12% and 13%, C)14%, D)Greater than 15%

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The solution explains how to calculate the rate of return so that given annual withdrawals can be made from a lump sum at the beginning.

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The benefits are in the nature of an annuity, with the present ...

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