02.04.2013 Views

Perpetuities and Annuities - Corporate Finance - Ivo Welch

Perpetuities and Annuities - Corporate Finance - Ivo Welch

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An insurance company offers a retirement annuity that<br />

pays $100,000 per year for 15 years <strong>and</strong> sells for $806,070.<br />

What is the implied interest rate (here called an IRR—more<br />

soon) that this insurance company is offering you?<br />

41/1

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