Answer:
$4,250
Explanation:
Current return = $102,000 - $85,000 = $17,500
Current rate of return = $17,500/$85,000 = 0.2, or 20%
Additional required rate of return = 25% - 20% = 5%
Dollar amount of income = 5% * $85,000 = $4,250
Therefore, Barbra needs $4,250 to reach her objective.
Check:
Total return = $17,500 + $4,250 = $21,250
Total required rate of return = $21,250/$85,000 = 0.25, or 25%.
