Problem 6-72 Calculating Interest Rates [LO4) A financial planning service offer

Question

Problem 6-72 Calculating Interest Rates [LO4) A financial planning service offers a college savings program. The plan calls for you to make six annual payments of $12,500 each, with the first payment occurring today, your child's 12th birthday. Beginning on your child's 18th birthday, the plan will provide $27000 per year for four years. What return is this investment offering? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Return

Explanation / Answer

Rate = 7.47%

A B C D E F G H I J 1 Age 12 13 14 15 16 17 18 19 20 21 2 Cash Flow -12500 -12500 -12500 -12500 -12500 -12500 27000 27000 27000 27000 Rate 7.47% Using IRR function =IRR(A2:J2)

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