Problem 53 Finding the required interest rate Your parent wi

Problem 5-3 Finding the required interest rate Your parent will retire 15 years. They currently have $300,000 and they think they will need $1,050,000 at retirement. Wha annua interest rate st the eam to reach their goa assu ) y dont ave any addition funds? Round your answer to two decimal places.

Future Value = 1,050,000 ; Present Value = 300,000 ; Years = 15 ; Rate = ?

Future Value = Present Value x (1+Rate)^Years

1050000 = 300000 x (1+Rate)^15

(1+Rate)^15 = 1050000/300000

Rate = (1050000/300000)^(1/15)-1

Rate = 8.71%

Annual interest rate = 8.71%

Problem 5-3 Finding the required interest rate Your parent will retire 15 years. They currently have $300,000 and they think they will need $1,050,000 at retir

Problem 53 Finding the required interest rate Your parent wi

Solution

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