Your finance advisor offers you an investment that promise $200000 in 15 years from now. He said that you will need to contribute an initialinvestment of $45,000 now. Required:a. What rate of interest was used in the computation of this investment offerassuming the rate is compounding annually?b. If you wish to retire in just 10 years from now with the same $200 000and the rate of return is 12%, how much money would you need to invest now?c. If you wish to retire with $250 000, using the same initial investment of$45 000 and the rate of return of 15%, how long will you need to wait beforeyou can retire?
Your finance advisor offers you an investment that promise $200000 in 15 years from now. He said that you will need to contribute an initialinvestment of $45,000 now. Required:a. What rate of interest was used in the computation of this investment offerassuming the rate is compounding annually?b. If you wish to retire in just 10 years from now with the same $200 000and the rate of return is 12%, how much money would you need to invest now?c. If you wish to retire with $250 000, using the same initial investment of$45 000 and the rate of return of 15%, how long will you need to wait beforeyou can retire?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 16P
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Question
Your finance advisor offers you an investment that promise $200
000 in 15 years from now. He said that you will need to contribute an initial
investment of $45,000 now. Required:
a. What rate of interest was used in the computation of this investment offer
assuming the rate is compounding annually?
b. If you wish to retire in just 10 years from now with the same $200 000
and the
c. If you wish to retire with $250 000, using the same initial investment of
$45 000 and the rate of return of 15%, how long will you need to wait before
you can retire?
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