Assuming they donot save any additional funds

Assignment Help Financial Management
Reference no: EM131027055

Problem 5-3 Finding the required interest rate Your parents will retire in 26 years. They currently have $340,000, and they think they will need $2,500,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.

Reference no: EM131027055

Questions Cloud

Bridge design firm is performing an economic analysis : A bridge design firm is performing an economic analysis of two mutually exclusive designs for a highway overpass. The steel girder option has an initial cost of $2.23 million, and the concrete option has an initial cost of $2.43 million. Based on the..
Maximum you should be willing to pay for this investment : An investment is expected to produce $2,281 at the end of each year for the next 13 years. Other investments of similar riskiness available to you are yielding 9.7 percent return. What is the maximum you should be willing to pay for this investment?
Annual rate of return on this sculpture : Assume a bronze sculpture sold in 2007 at auction for a price of $10,338,500. Unfortunately for the previous owner, he had purchased it in 1999 at a price of $12,386,500
Present and future values of a cash flow stream : An investment will pay $100 at the end of each of the next 3 years, $250 at the end of Year 4, $300 at the end of Year 5, and $600 at the end of Year 6.
Assuming they donot save any additional funds : Problem 5-3 Finding the required interest rate Your parents will retire in 26 years. They currently have $340,000, and they think they will need $2,500,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don..
The dividend yield and the capital gains yield : Suppose a stock had an initial price of $90 per share, paid a dividend of $2.40 per share during the year, and had an ending share price of $76. Compute the percentage total return. What was the dividend yield and the capital gains yield?
Expected net present value of this purchase opportunity : Stu can purchase a one-bedroom house near his college today for $110,000, including the cost of some minor repairs. He expects to be able to resell it in four years for $150,000 if he just puts a little effort into cleaning up the property. At a disc..
Identical deposit each year up to and including the year : Today is your birthday and you decide to start saving for college. You will begin college on your 18th birthday and will need $10,000 per year at the end of each of the next 4 years (after that 18th birthday - isn't it nice the college lets you pay a..
What is the profit equation for the company : Soumotchka Accessories make customized handbags to order. The price they can charge depends on how many they sell, x, consistent with the expression: What is the profit equation for the company?

Reviews

Write a Review

 

Financial Management Questions & Answers

  Bonds for some much-needed expansion projects

BDJ Co. wants to issue new 25-year bonds for some much-needed expansion projects. The company currently has 7.8 percent coupon bonds on the market that sell for $1,125, make semi-annual payments, and mature in 25 years. Required: What coupon rate sho..

  What is the highest interest rate-refinance the mortgage

A homeowner took out a 30-year, fixed-rate mortgage of $310,000. The mortgage was taken out 10 years ago at a rate of 7.50 percent. If the homeowner refinances, the charges will be $2,500. What is the highest interest rate at which it would be benefi..

  About financial market expectations of one year yields

Current annualized yields on 1 year US treasury securities are only .28%....while current annualized yields on 2year US treasury securities are .69% (note you may assume that both 1 and 2year securities in this example are “0” coupon securities with ..

  Deducted from the original funds invested

Suppose an individual invests $20,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 3.0 percent of the amount invested and is deducted from the original funds invested.

  Companys customers owe for items purchased on credit

Consider the following balance sheet data for Kristy’s Party Supply: Cash $ 92,000 Accounts payable $ 75,000 Accounts receivable 145,000 Notes payable 94,000 Retained earnings 250,000 Total assets $ 1,068,000 Total liabilities & equity $ 1,068,000 Ho..

  Discuss the following topic should speculators use currency

discuss the following topic should speculators use currency futures or options? many multinational firms use currency

  Process for preparing pro forma income statements

Describe the process for preparing pro forma income statements and balance sheets. How are these statement analyzed to make cogent evaluations?

  Determine the market value of the bond

A corporate bond has a face value of $1000 with maturity date 20 years from today. The bond pays interest semi annually at a rate of 8% per year based on the face value. The interest rate paid on similar corporate bonds has decreased to a current rat..

  Indicates the stance of monetary policy

_____ is a variable that responds to the actual bank's tools and indicates the stance of monetary policy.

  What is the gain or loss in inventory value

Suppose Stack Pool Inc. had inventory in Britain valued at 240,000 pounds one year ago. The exchange rate for dollars to pounds was 1£ = 2 U.S. dollars. This year the exchange rate is 1£ = 1.82 U.S. dollars. The inventory in Britain is still valued a..

  Law granting trade preferences to imports from island nation

The U.S. law granting trade preferences to imports from the island nations of the Caribbean and Central America is called:

  Constructed with two risky securities

You are considering investing $1,500 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 4..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd