Personal Finance (8th Edition) (What's New in Finance)
Personal Finance (8th Edition) (What's New in Finance)
8th Edition
ISBN: 9780134730363
Author: Arthur J. Keown
Publisher: PEARSON
Question
Book Icon
Chapter 3, Problem 1PA
Summary Introduction

To determine:

The number of years to earn one million on investing $250,000 in diversified equity portfolio returning 8 percent per year.

Introduction:

The diversified equity portfolio can be referred to the collection of number of equity shares from different companies. The portfolio is made up of different equity shares which provides different rate of return to reduce the risk and maximize the return from investment.

Expert Solution & Answer
Check Mark

Explanation of Solution

Given,

Investment in the diversified equity portfolio is $250,000.

Return on investment is 8%.

Required return from investment is $1,000,000.

The calculation of number of years on spreadsheet is,

Particulars Amount ($)
Future Value 1,000,000
Present Value 250,000
Rate of Interest (%) 0.08
Number of Years 18.01293668

Table (1)

The number of years is 18.012 years.

Conclusion

Thus, the number of years to earn $1,000,000 by investing $250,000 in diversified equity portfolio returning 8% is 18.012 years.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Knowledge Booster
Background pattern image
Recommended textbooks for you
Text book image
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Text book image
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:9781260013962
Author:BREALEY
Publisher:RENT MCG
Text book image
Financial Management: Theory & Practice
Finance
ISBN:9781337909730
Author:Brigham
Publisher:Cengage
Text book image
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Text book image
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Text book image
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education