250,000(1+i)^15 = 51,200((1+i)^15 -1)/i)
solve for i.
Is there a simple step I'm missing to make solving for i easier??
(this comes from setting two future value equations equal to one another to determine at what interst rate a lifetime annuity = a lump sum...
FV=PV(1+i)^n=PMT((1+i)^15 -1)/i) where PV = the lump sum of 250,000 and PMT = lifetime annuity of 51200 and i is the interest rate). The answer is 24.83% (thanks to trial and error), but I am trying to get there algebraically...
THANKS for any ideas!
actually what happened was that I looked at the problem wrong (I said "Do you know about logarithms?"), thinking that the answer was a simple logarithm problem. Then I saw it wasn't so I quickly edited it so that I could post an actual answer, and then I just deleted it, because I've got school tomorrow and I need to sleep (It's 10:42 for me right now).