Sara invests a total of $10,000. She uses part of the $10,000 to purchase an annuity with payments of $1,000 at the beginning of each year for 10 years. The purchase price of the annuity is its present value calculated at an annual effective interest rate of 8%. Sara invests the balance of her $10,000 in a 10-year certificate of deposit that earns nominal 9% per year compounded quarterly. As Sara receives payments from the annuity, she reinvests them at an annual effect interest rate of 7%. Calculate the annual effective yield rate on the entire $10,000 investment over the 10-year period.
The answer given is 7.95% and I need to show my work in terms like S-angle n and S-double-dot angle n, etc, which is new to me so any help would be great! thank you!
The answer given is 7.95% and I need to show my work in terms like S-angle n and S-double-dot angle n, etc, which is new to me so any help would be great! thank you!
