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Daniel wants to have $500,000 in 10 years. He plans to achieve his goal by investing the $100,000 that he had inherited when his father
Daniel wants to have $500,000 in 10 years. He plans to achieve his goal by investing the $100,000 that he had inherited when his father passed away recently. He wants to invest the money in an index fund with expected return of 10% per year. He can borrow an investment loan rate of interest of 4% per year.
Required: (a) what is the rate of return that he must earn to achieve his goal? (4 Marks) (b) how much money must he borrow to invest in order to achieve his goal? (6 Marks)
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