mathnd 354171018questionld-6adlushed-fabeecld 3861 Christine Pellman 4/23/16 1 e

Question

mathnd 354171018questionld-6adlushed-fabeecld 3861 Christine Pellman 4/23/16 1 ework: 2-3 MyFinancelab: Module Two Homework Overvis Problem P3-16 siml toj Scores 0 of 1 pt As ye-at Stere. 32.22% (2.22 of 10 pts) Kak Van Houten, who has been married for 25 years, woukd like to bay his wide an expensive diamond reg with a platieum setting on their 30-ycar wodding anniversary. Assume that the cost of the sing will be What annual rate of seturn must Kak earn on his imvestment to accumiulale enough money to pay for the ring? Cick the table icon to view the PVIF table The annual rate of return Krk must earn oe h"vestment is% (Round to the nearest mtep) (Round to the nearest integer) Enter your answer in the answer box, then cick Check Clear Al 0

Explanation / Answer

Answer :

Rate is : 12% Details working is below As , cost of ring after 5th year is $ 8371 and present we have $ 4750 so , for 5 year time period, we need to invest $ 4750 , so future value will be $ 8371 CAGR = FV/PV (Root) 1/N - 1 = $ 8371/ $ 4750 (Root) 1/5 - 1 = 12% OR in simple terms = PV/FV = DISCOUNT FACTOR = $ 4750 / $ 8371 = 0.5674 So, we look in PVIF chart in 5th year so we find 0.5670 in 12% rate, so rate is 12% OR FV = PV * (1+R)* TIME = 4750*1.12*1.12*1.12*1.12*1.12 = $ 8371

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.