Question
Mr. Richards has a new client will earn much higher returns than normal because of their risk profile. The client will role $75,000 into an
Mr. Richards has a new client will earn much higher returns than normal because of their risk profile. The client will role $75,000 into an account with the firm and then they will make additional monthly deposits of $2,000 per month for the next 25 years. He also wants to illustrate the returns for a bank CD at 2%, market returns at 4% and normal returns for him of 8%. To further illustrate the power of his returns, he wants to show the returns at 12% for 20 years.
1. Use the standard TVM setup. Remember M is 12 for monthly. Setup a summary table showing the rates and overall portfolio value and one additional 20 year return. Also shoe the overall growth rates.
2. Explain how the compound interest and growth rates differ across the different returns.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started