Question

you are 23, you inerhit 70,000 from your grandmother. if you purchase a 105,000 camper to...

you are 23, you inerhit 70,000 from your grandmother. if you purchase a 105,000 camper to ccelebrste 30th bday, whst is rate of return you mudt earn?

Homework Answers

Answer #1

At age 23, you inherit from your grandmother = $70,000

Future accumulated Value required at age 30th = $105,000

Calculating the Rate of Return you must earn to accumulated the amount:-

Annualized Rate of Return = (Future Value /Current Value)^(1/n) - 1

Where,

n= no of periods = 7 years

Annualized Rate of Return = ($105,000/$70,000)^(1/7) - 1

Annualized Rate of Return = 1.05963 - 1

Annualized Rate of Return = 5.96%

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