Question

11) Over the past seven years your stock portfolio went from $8,000 to 15,000. What annual percentage rate of retur did you earn? 12) You want $50,000 for a house down payment four years from today. You currently have $10,000 and plan to save $600 per month beginning one month from today. Interest on the account will compound monthly. What nomir annual rate of return do you need to earn to accomplish your goal?

Answer 1

11)

End value	15000
Start value	8000
Years	7
Annual rate of return	9.40%
Check
Year	0	1	2	3	4	5	6	7
Stock portfolio @ 9.40%	8000	8752	9574	10473	11458	12534	13712	15000

12)

Future value	50000
Current available amount	10000
Net future value	40000
Monthly deposit	600
Total number of months	48
At the end of 4 years total amount invested	28800
Interest	11200
Nominal annual rate of return	16%
Month	Amount	Interest	Total
1	600	8.0	608.0
2	600	8.1	1216.1
3	600	16.2	1832.3
4	600	24.4	2456.8
5	600	32.8	3089.5
6	600	41.2	3730.7
7	600	49.7	4380.4
8	600	58.4	5038.9
9	600	67.2	5706.0
10	600	76.1	6382.1
11	600	85.1	7067.2
12	600	94.2	7761.4
13	600	103.5	8464.9
14	600	112.9	9177.8
15	600	122.4	9900.2
16	600	132.0	10632.2
17	600	141.8	11373.9
18	600	151.7	12125.6
19	600	161.7	12887.3
20	600	171.8	13659.1
21	600	182.1	14441.2
22	600	192.5	15233.8
23	600	203.1	16036.9
24	600	213.8	16850.7
25	600	224.7	17675.4
26	600	235.7	18511.0
27	600	246.8	19357.9
28	600	258.1	20216.0
29	600	269.5	21085.5
30	600	281.1	21966.6
31	600	292.9	22859.5
32	600	304.8	23764.3
33	600	316.9	24681.2
34	600	329.1	25610.3
35	600	341.5	26551.7
36	600	354.0	27505.8
37	600	366.7	28472.5
38	600	379.6	29452.1
39	600	392.7	30444.8
40	600	405.9	31450.8
41	600	419.3	32470.1
42	600	432.9	33503.0
43	600	446.7	34549.8
44	600	460.7	35610.4
45	600	474.8	36685.2
46	600	489.1	37774.4
47	600	503.7	38878.0
48	600	518.4	39996.4
Total		11196	@16% nominal interest rate