With the present amount invested, P, the value received for n pay-out periods is calculated through the equation,
P = A x (1 - (1/(1 + r)^n)) / r)
Substituting the known values,
100,000 = (4,000)(1 - (1/(1 + r)^40)) / r)
The value of r from the equation is 0.3999 or 0.4. Hence, the nominal rate per year is equal to 1.6.
