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What rate of return must earn on that savings to hit

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Problem 1: Imagine that you deposit $6,000 a year, starting one year from today, for four years into a savings account paying 6% per annum. (That is one deposit of $6,000 per year.) How much money will you have immediately after you make your fourth and final deposit?

Option 1: 27,822.56

Option 2: 30,299.44

Option 3: 26,247.70

Option 4: 24,000

Problem 2: Imagine that your goal is to retire 34 years from today with $1,000,000 in savings. Assuming that you currently (i.e., today) have $5,000 in savings, what rate of return must you earn on that savings to hit your goal?

(Hint: Solve your future value formula for the discount rate, R)

Option 1: 4.8824

Option 2: 0.1686

Option 3: 0.2000

Option 4: 0.4882

Reference no: EM132685962

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