I am going to give you $300,000 to invest, with the objective of growing it to $425,000 in 5 years so that you can take your $125,000 gain and use it as a downpayment towards buying a house. However, the $300,000 is not free you must pay me a fee, which I normally set equal to the yield-to-maturity on the 5-year Treasury scheduled to mature in 2027. That yield is now around 4.21% (up from 1.64% in Spring 2022, up from 1.06% in Fall 2021, up from 0.83% in Spring 2021). Remember that the ytm on a bond is the average annual rate of return you can expect to earn over the life of the bond, if you hold it to maturity (and coupon reinvesting is done properly).

A) Now, including the amount of the fee that you will pay me from the portfolios liquidation proceeds at the end of the 5th year (so that you pay me and still have $425,000 left over), what monthly rate of return must you earn on the portfolio if you can save $250 per month towards your new (revised with fee) objective? Round to xx.yyy% or .xxyyy

B) Annualize the rate in (A) under both assumptions we learned in the very beginning of the course.