A person makes annual payments of $1,000 into an ordinary annuity At the end of 5 years, the amount in the annuity is $5,840 What annual nominal compounding rate has this Annuity earned ...

The future value formula is given by Therefore we have W ...

A person makes annual payments of $1,000 into an ordinary annuity. At the end of 5 years,

Question:

A person makes annual payments of $1,000 into an ordinary At the end of 5 years, the amount in the is $5,840. What annual nominal rate has this earned?
Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,... Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will...