Check My Work Finding the required interest rate Your parent

Check My Work Finding the required interest rate Your parents will retire in 16 years. They currently have $280,000, and they think they will need $750,000 at retirement. What annual interest rate must goal, assuming they don\'t save any additional funds? Round your answer to two decimal places Check My Work

Solution

1.

Current Value of Saving = $280,000

Target retirement amount = $750,000

Number of year remains in retirement = 16 year.

Suppose annual Interest rate = r

$750,000 = $280,000 × (1 + r) ^ 16

(1 + r) ^ 16 = ($750,000 / $280,000)

(1 + r) = (2.6786) ^ (1 / 16)

(1 + r) = 1.0635

r = 6.35%

Annual Interest rate they should earn to reach his retirement goal is 6.35%.