The expenses associated with sending two children through college prevented Victor and Maria Hernandez from adding substantially to their investment program. Now that their younger son, Brian, has completed school and is working full time, they would like to build up their investments quickly. Victor is 47 years old and wants to retire early, perhaps by age 60. In addition to the retirement program at his place of employment, Victor believes that their investment portfolio, currently valued at $70,000, will need to triple to $210,000 by retirement time.

He and Maria realize that they will have to sacrifi ce a lot of current spending to save and invest for retirement.

(a) What rate of return is needed on the $70,000 portfolio to reach their goal of $210,000 (assuming no additional contributions)? Use Appendix A.3 or visit the Garman/

Forgue companion website.