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Ede4ka [16]
3 years ago
14

Your parents will retire in 27 years. They currently have $280,000 saved, and they think they will need $1,900,000 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.
Business
1 answer:
Ivahew [28]3 years ago
3 0

Answer:

Annual Rate=7.35%

Explanation:

Calculation for the annual interest rate must they earn to reach their goal

Number of years =27

PV =280,000

FV =1,900,000

Using this formula

Annual Rate=(FV/PV)^(1/n)-1

Let plug in the formula

Annual Rate=(1,900,000/280,000)^(1/27)-1

Annual Rate=6.7857^(1/27)-1

Annual Rate=1.07349-1

Annual Rate=0.0735

Annual Rate=7.35%

Therefore the annual interest rate must they earn to reach their goal will be 7.35%

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