Question
Bill OBrien would like to take his wife, Mary, on a trip three years from now to Europe to celebrate their 40th anniversary. He has
Bill OBrien would like to take his wife, Mary, on a trip three years from now to Europe to celebrate their 40th anniversary. He has just received a $20,500 inheritance from an uncle and intends to invest it for the trip. Bill estimates the trip will cost $28,700. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What interest rate, compounded annually, must Bill earn to accumulate enough to pay for the trip? (Round your interest rate to the nearest whole percentage.)
John has an investment opportunity that promises to pay him $16,589 in four years. Suppose the opportunity requires John to invest $13,140 today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What is the interest rate John would earn on this investment? (Round your interest rate to the nearest whole percentage.)
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