Question
1. Suppose you are committed to owning a $190,000 BMW. If you believe your mutual fund can achieve a 12 percent annual rate of return
1. Suppose you are committed to owning a $190,000 BMW. If you believe your mutual fund can achieve a 12 percent annual rate of return and you want to buy the car in nine years on the day you turn 30, how much must you invest today? You are 15 years old now.
2. You have just made your first $5,000 contribution to your RRSP. Assuming you earn an 11 percent rate of return and make no additional contributions, what will your account be worth when you retire in 45 years? What if you wait ten years before contributing? (Does this suggest an investment strategy?)
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