Ahmed Mustafa just turned 26 and wants to have $5787.48 saved in 4 years 30th bi

Question

Ahmed Mustafa just turned 26 and wants to have $5787.48 saved in 4 years 30th birthday. Assuming no additional deposit if he currently has $4,100 in a intermediate- term bond fund earning a 7 percent yield will he reach his goal? What is the rate of return is required to meet his goal Ahmed Mustafa just turned 26 and wants to have $5787.48 saved in 4 years 30th birthday. Assuming no additional deposit if he currently has $4,100 in a intermediate- term bond fund earning a 7 percent yield will he reach his goal? What is the rate of return is required to meet his goal

Explanation / Answer

Future Value = Present Value ( 1+R)^N

= 4100 ( 1+0.7) ^4

= 5374

He will not reach his goal if his return is 7%

Required rate of return to meet his goal

Future Value = Present Value ( 1+R)^N

5787.48 = 4100 ( 1+ R) ^4

5787.48/4100 = ( 1+R )^4

1.4115 = ( 1+R )^4

R = 9%

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