Today Raylin Givens invested $3,000 for his one-year-old daughter. He intends to use this fund for...
Today Raylin Givens invested $3,000 for his one-year-old
daughter. He intends to use this fund for her
education 17 years from now. He estimates he will need $40,000 at
that time. What average annual
compound rate of return will Raylin need to achieve his goal?
A:15.25%
B:12.74:
C:16.46%
D:17.98%
Homework Answers
Information provided:
Present value= $3,000
Future value= $40,000
Time= 17 years
The average annual compound return is calculated by entering the below in a financial calculator:
FV= 40,000
PV= -3,000
N= 17
Press the CPT key and I/Y to calculate the average annual compound return.
The value obtained is 16.46.
Therefore, the average annual compound return is 16.46%.
Hence, the answer is option c.
In case of any query, kindly comment on the solution.
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