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The annuity fund is offering a return of: 12.00%
What is an annuity?
An annuity is an investment that pays a fixed periodic amount to be the beneficiary of the investment, in this case, Joshua is entitled to three equal payments of $1,400 each year by investing $3,362.56 today.
The return on the annuity fund can be determined using a financial calculator which requires that the calculator be set to its end mode because annual payments would occur at the end of each year.
N=3(number of annual payments required by the annuity)
PMT=1400(annual payment which is $1,400 per year)
PV=-3362.56( the initial amount that must be in the account so as to be able to withdraw $1,400 per year for 3 years)
FV=0(this is future value which is not applicable because we need to invest an amount today, present value, to be entitled to annual cash inflow, not that we expect a lump sum at the end of the investment)
CPT(press compute)
I/Y=12.00%
Find out more about annuity on:brainly.com/question/14000207
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