Jones expects an immediate investment of 7459480 to return 1

Jones expects an immediate investment of $74,594.80 to return $14,000 annually for nine years, with the first payment to be received one year from now. What rate of interest must Jones earn? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round \"Table Factor\" to 4 decimals.) Present value Annuity payment -Table Factor Interest Rate

Solution

Annual Payment = $14,000
Present Value = $74,594.80
Period = 9 years

Table Factor = Present Value / Annual Payment
Table Factor = $74,594.80 / $14,000
Table Factor = 5.3282

Using PVA of $1 table values, i = 12.00%

So, Jones must earn a rate of return of 12.00%