Your uncle named you beneficiary of his life insurance policy. The insurance company gives you a choice of ,100,000 or a 12 year annuity of 12,000 at the end of each year. What rate of return is the insurance company offering

Your uncle named you beneficiary of his life insurance policy. The insurance company gives you a choice of ,100,000 or a 12 year annuity of 12,000 at the end of each year. What rate of return is the insurance company offering

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter27: Time Value Of Money (compound)

Section: Chapter Questions

Problem 10E

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

Your uncle named you beneficiary of his life insurance policy. The insurance company gives you a choice of ,100,000 or a 12 year annuity of 12,000 at the end of each year.

What rate of return is the insurance company offering

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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