Question

In: Finance

Your accountant is suggesting a new financial product that would require an initial investment on your...

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?

Solutions

Expert Solution

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%


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