Finding the required interest rate

Assignment Help Financial Management
Reference no: EM131012110

Finding the required interest rate Your parents will retire in 16 years. They currently have $370,000, and they think they will need $1,400,000 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: EM131012110

Questions Cloud

What is the current share price : Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next seven years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $15.50 per share 8 years..
What does bill believe the inflation rate : An investment offers a total return of 14 percent over the coming year. Bill Bernanke thinks the total real return on this investment will be only 8.1 percent. What does Bill believe the inflation rate will be over the next year?
Time to reach a financial goal : Time to reach a financial goal You have $19,302.28 in a brokerage account, and you plan to deposit an additional $6,000 at the end of every future year until your account totals $220,000. You expect to earn 12% annually on the account. How many years..
How long will it take to double your money : Time for a lump sum to double If you deposit money today in an account that pays 14% annual interest, how long will it take to double your money? Round your answer to two decimal places. How many years?
Finding the required interest rate : Finding the required interest rate Your parents will retire in 16 years. They currently have $370,000, and they think they will need $1,400,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any ..
Considering the purchase of new manufacturing facility : Sanders Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $288,000. The facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value after the seven years..
Average cost of production of electricity per kwh will be : A 500 kW plant costs $ 1000 per kW installed. Fixed charges are estimated at 14% and operating cost is 13 cents per kWh. The plant averages 200 kW for 5000 hours of the year, 450 kW for 1200 hrs and 80 kW for the remaining period. The average cost..
Describe steps involved with the target marketing process : Name and describe the steps involved with the target marketing process. Discuss the ways markets can be segmented. Provide real world examples of effective target marketers to support your answer. How does this process relate to the shotgun and the r..
Give a graph of the rational function : Give a graph of the rational function and label the coordinated of the stationary points and inflection points. Show the horizontal and vertical asymptotes and label them with their equations.

Reviews

Write a Review

Financial Management Questions & Answers

  What would the rate legally have to be quoted as

A local finance company quotes an interest rate of 19.5 percent on one-year loans. So, if you borrow $46,000, the interest for the year will be $8,970. Because you must repay a total of $54,970 in one year, the finance company requires you to pay $54..

  What is its expected dividend payout ratio

Flavortech expects EBIT of $2,000,000 for the current year. The firm's capital structure consists of 40% debt and 60% equity and its marginal tax rate is 40%. The cost of equity is 14% and the company pays a 10% rate on its $5,000,000 of long term de..

  What are the operating cash flows each year

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose machine. The machine's basic price is $1,000,000 and our accountant requires that it be written off over its 5 year class using straigh..

  Consider the mean-variance portfolio optimization

Consider the mean-variance portfolio optimization with n risky assets with short-sales. Write down the first order optimality conditions for a market neutral efficient frontier.

  Determine cost of equity for firm

We want to determine cost of equity for Firm A. We know that Firm A’s target debt-to equity ratio is 2.00. We also know that there is a comparable firm which has exactly same lines of business and therefore is expected to have the same level of busin..

  New assembly line after taking flotation costs into account

Suppose your company needs $13 million to build a new assembly line. Your target debt−equity ratio is 0.45. The flotation cost for new equity is 9 percent, but the flotation cost for debt is only 6 percent. What is your company’s weighted average flo..

  Whats its turnover ratio

An open end mutual fund has average daily assets of $3.4 billion during the year. It sold $1.25 billion worth of stocks and bought $1.4 billion worth of stocks during the year. What’s its turnover ratio? Explain the difference between an open end fun..

  Shares of sirius satellite radio

You would like to buy shares of Sirius Satellite Radio (SIRI). The current ask and bid quotes are $4.18 and $4.15, respectively. You place a market buy order for 590 shares that executes at these quoted prices. How much money did it cost to buy these..

  What is the portfolios expected risk

A portfolio is invested 40 percent in Stock G and 60 percent in Stock J. The expected returns on these stocks are 10 percent and 15 percent respectively. The standard deviations of these stocks are 10% and 18% and the correlation coefficient between ..

  What is the target share price in seven years

Davis, Inc., currently has an EPS of $2.16 and an earnings growth rate of 7 percent. The benchmark PE ratio is 20. What is the target share price in 7 years?

  Tried-true home repair is considering replacement of bobcat

Tried and true home repair is considering replacement of its bobcat. The old Machine cost $150,000 and was depreciated using a 5 year straight line depreciation schedule. The machine has been in operation for three years. It could be sold for $30,000..

  What should be current rate for two-year treasury security

The current one-year T-bill rate is .30 percent and the expected one-year rate 12 months from now is 1.00 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security?

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