Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You just received a generous birthday present from your favorite Uncle - - $ 2 0 0 ( partly a reward for the excellent grades

You just received a generous birthday present from your favorite Uncle -- $200(partly a reward for the excellent grades you've been getting at Pace). You plan on investing this cash and expect to earn a return of 7% per year, compounded annually.
a) How much (rounded to the nearest penny) will your investment grow to in 10 years?
b) Your goal is to have $500 available in 10 years. What rate of return, compounded annually (rounded to 2 decimal places), would you have to earn to achieve your goal?
c) The rate of return in part b) above involves too much risk for you. If the maximum risk you're willing to accept involves a rate of return of 8% per year, compounded annually, how many years will it take to achieve your goal of $500(round your answer to two decimal places)?
d) Suppose you could earn a rate of return of 8% per year, compounded daily. How long would it take to achieve your goal (in years) now (round your answer to two decimal places)?
image text in transcribed

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

Stocks Bonds And The Investment Horizon

Authors: Haim Levy

1st Edition

9811250146, 978-9811250149

More Books

Students also viewed these Finance questions