Question

Suppose that you plan to invest $1200 at the end of each of the next 9 years and you want to have accumulated $15,600 at the end of this period. What rate of return would you need to achieve? (Hint: this is what I called an A=BxC problem in which you know A and B.)

Answer 1

Answer:

The rate of return is 8.96%

Explanation:

The rate of return required here can be computed using excel rate formula ,which is stated thus:

=rate(nper,-pmt,pv,fv)

nper is the duration of investment which is 9  years

pmt is the yearly invested sum of $1,200

pv is the present worth of total invested sum which is unknown and taken as zero

fv is the future accumulated investment amount of $15,600

=rate(9,-1200,0,15600)=8.96%