CFA Practice Question

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CFA Practice Question

You have $10,000 in a savings account. You wish to make a withdrawal of $1,769.84 at the end of every year for the next 10 years. After the tenth withdrawal, the account will have a zero balance. How much must the savings account pay in interest per year?
A. 12%
B. 11%
C. 7%
Explanation: By calculator: PMT = $1,769.84; n = 10; PV = -$10,000.00; CPT i = 12%

User Contributed Comments 1

User Comment
Kuki FV of $10000 for 10 yrs = PV of annuity of $1769.84 for 10 yrs.

Equate the two and find r

Answer r = 12.06%
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