Question: Include all the details and how to solve Solving for i in an Annuity -10,500 2 Present Value Future Value Annual Payment 5 Number of

Include all the details and how to solve

Solving for i in an Annuity -10,500 2 Present Value Future Value

Solving for i in an Annuity -10,500 2 Present Value Future Value Annual Payment 5 Number of Years Annual Rate 0 1,500 10 Instruction: Suppose that you are approached with an offer to purchase an investment o that will provide cash flows of $1.500 per year for 10 years. The cost of 1 purchasing this investment is $10.500. 2 So now the annual rate is just the annual return. 3 Use the following Rate function 4 5 Excel, however, offers the RATE function that will solve for the interest rate. It is defined as: 6 RATE(NPER, PMT. PV. FV. TYPE, GUESS) 7 where the arguments are as defined earlier, and GUESS is your optional first guess at the 8 correct answer. Ordinarily, the GUESS can be safely omitted. 9 2 3 4 5 0 Hint: I have made the PV negative. So no need for you to adjust the signs. 1

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