Compute average annual rate of return

Reference no: EM1358485

Assume you are planning how to finance your child's college education. The child is 3 years old now so there are 15 years to go before your child enters college at age 18. According to your estimates you will need $80,000 in the bank at that time.

a. If you believe you can earn 9% a year, on average, between now and the time your child starts college, how much will you have to invest each year between now and then in order to reach your target? (for simplicity, assume end-of-year payments)

b. It appears the annual payment required to reach your target is more than you can afford. If the most you can afford to invest each year is $2,000 what average annual rate of return must you earn in order to reach your target?

Reference no: EM1358485

Questions Cloud

Conduct a cursory search of integrative medicine : Integrative medicine - Conduct a cursory search of Integrative Medicine (IM) in your geographical area and choose one type to provide a brief summary.

Illustrate what will be the level of output and price : Illustrate what will be the level of output and price in the long run if this industry were perfectly competitive.

Compute the required return of a security with a beta : Compute the required return of a security with a beta of 1.21 and Is the security overpriced or underpriced

Adhd interfere with peer relationships : Does ADHD interfere with peer relationships? How? Why do peer reject children with ADHD? What types of interventions can prevent poor peer relationships?

Compute average annual rate of return : Suppose you are considering how to finance your child's college education. The child is 3 years old now so there are 15 years to go before your child enters college at age eighteen.

Supply chain - relationship management : Show why relationship management is so important in managing the supply chain. Provide examples of why building, and maintaining these relationships is important.

Cultures in regards to adhd : What are the similarities and differences across countries, cultures in regards to ADHD.

What fraction of the initial kinetic energy : A 2100 kg car traveling to the right at 32m/s is chasing a second car of the same mass that is traveling to the right at 10m/s.

Computer the margin of safety : Embleton Corporation estimates that variable costs will be 40 percent of sales, and fixed costs will total $900, 000. The selling price of the product is $5.

User Account

All Pages