In: Finance
Your accountant is suggesting a new financial product that would require an initial investment on your part today of $19,000 and then provide you a payout of $360,000 in 48 years' time at your retirement. What annually compounded rate of return would you earn in this product?
Future Value =Present Value *(1+Rate of Interest)^Time
360,000= 19,000*(1+Rate of Interest)^48
[(360,000/19000)^(1/48)]-1 = Rate of Interest
Rate of Interest = 6.32%
Answer = 6.32%