Question
Alyson, another investor, has also purchased an IIP for the original price of $919.27823668767. Two years pass, and Alyson has just received the annual payment
Alyson, another investor, has also purchased an IIP for the original price of $919.27823668767. Two years pass, and Alyson has just received the annual payment of $43. She is considering selling the IIP. Again, the original information regarding IIP's has been repeated below. Customers pay $919.27823668767 to buy an IIP. The IIP will pay out $43 at the end of each year for 8 years The IIP will pay out a further single payment of $1,000 after 8 years There are no further payments after this single payment at time 8.
(b) Barney and Alyson agree on the price calculated above. Ignoring tax and any other expenses, what is the effective annual return that Alyson has made on her investment? Recall that she has received 2 payments of $43 and the sale price. Give your answer as a percentage to 4 decimal places.
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Financial Algebra advanced algebra with financial applications
Authors: Robert K. Gerver
1st edition
978-1285444857, 128544485X, 978-0357229101, 035722910X, 978-0538449670
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