Paid $574,000 for an annuity that will pay $14,000 a year forever. The Rate of return will be 2.432%
Annual rate of return is the rate of change in the value of an investment. For example, if you expect an annual rate of return of 10%, you expect the value of your investment to increase by 10% each year.
How is Rate of return Calculated?
Rate of return is an approximate measure of the profitability of an investment. Rate of return is calculated by subtracting the initial cost of investment from the final value, dividing this new number by the investment cost, and finally multiplying by 100.
What is a good rate of return?
A good rate of return on an investment is typically around 7% per year. This is a barometer often used by investors based on the average historical returns of the S&P 500 after adjusting for inflation.
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