6-16. (Annuity interest rate) Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for $21,074.25 that will pay them $3,000 per year for 20 years. They don't have the slightest idea what return they would be making on their investment of S21,074.25. What rate of return would they be earning? 18 6-17. (Related to Checkpoint 6.1 on page 162) (Annuity payments) On December 31, Beth Klemkosky bought a yacht for $50,000. She paid $10,000 down and agreed to pay the balance in 10 equal annual installments that include both the principal and 10 percent interest on the declining balance. How big will the annual payments be? (Annuity interest rate) You've been offered a loan of $30,000, which you will have to repay in five equal annual payments of S10,000, with the first payment to be re- ceived one year from now. What interest rate would you be paying on that loan? 6-18