You have just deposited $10,500 into an account that promises to pay you an annual interest rate of 6.4 percent each year for the next 5 years. You will leave the money invested in the account and 15 years from today, you need to have $29,750 in the account. What annual interest rate must you earn over the last 10 years to accomplish this goal?

Answer:

7.59%

Explanation:

Calculation for What annual interest rate must you earn over the last 10 years to accomplish this goal

Future value required=[Amount of deposit*(1+6.4%)^5]*(1+I)^10

$29,750=[$10,500*(1+6.4%)^5]*(1+I)^10

$29,750=[$10,500*(1+0.064)^5]*(1+I)^10

$29,750=[$10,500*(1.064)^5]*(1+I)^10

$29,750=[$14,318.497198]*(1+I)^10

(1+I)^10=[$29,750/$14,318.497198]

(1+I)^10=2.077732013

(1+I)=2.077732013^(1/10)

(1+I)=1.07586791

Hence, annual interest rate will be:

Interest rate, I=(1.07586791-1)*100

Interest rate=0.07586791*100

Interest rate=7.586791%

Interest rate=7.59% (Approximately)

Therefore the annual interest rate that you must earn over the last 10 years to accomplish this goal is 7.59%

When performing a self-assessment, it is useful to ask yourself whether you _________.
a.
Really enjoy what you do at work
b.
Think your job pays enough
c.
Can achieve your career goals in the same company
d.
All of the above


Please select the best answer from the choices provided

A
B
C
D

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