Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Five years ago Peter had started his saving for his childrens higher education by putting a lump sum of $25,000 into an investment instrument on

Five years ago Peter had started his saving for his childrens higher education by putting a lump sum of $25,000 into an investment instrument on the securities market. The investment has been paying a rate of returns of 12.3% per year, compounding monthly. Required: a. Calculate how much money has Peter accumulated from his investment now? (3 marks) b. If Peters initial investment was $30,000 and he had obtained the same investment outcome after five years, how much should have been the actual rate of return, assuming compounding annually for his investment ? (4 marks) c. If Peter would like to have totally $60,000 for his childrens higher education and moves all the saving accumulated from current investment after five year to another instrument that pays the interest rate of 13.5% per year, compounding annually. How long will it take for Peter to reach his target of $60,000?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Risk Management In Organisations An Integrated Case Study Approach

Authors: Margaret Woods

2nd Edition

1138632333, 9781138632332

More Books

Students also viewed these Accounting questions

Question

Outline the contributions of Socrates to psychology.

Answered: 1 week ago