Martin and Marcy McCormack have just become proud parents of septuplets. They have savings of $5000. They want to invest their savings so that they can partially support the children's university education. Martin and Marcy hope to provide $20,000 for each child by the time the children turn 18. What must the annual rate of return on the investment be for Martin and Marcy to meet their goal? The annual rate of return on the investment would need to be at least 22.34%. (Round to two decimal places.)
Martin and Marcy McCormack have just become proud parents of septuplets. They have savings of $5000. They want to invest their savings so that they can partially support the children's university education. Martin and Marcy hope to provide $20,000 for each child by the time the children turn 18. What must the annual rate of return on the investment be for Martin and Marcy to meet their goal? The annual rate of return on the investment would need to be at least 22.34%. (Round to two decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:**Financial Planning for Education**
Martin and Marcy McCormack have just become proud parents of septuplets. They have savings of $5000. They want to invest their savings so that they can partially support the children’s university education. Martin and Marcy hope to provide $20,000 for each child by the time the children turn 18. What must the annual rate of return on the investment be for Martin and Marcy to meet their goal?
The annual rate of return on the investment would need to be at least **22.34%**.
*(Round to two decimal places.)*
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Step 1: Introduction
Present value is an estimate of the present value of future cash values that may be received at a future date, discounted by an assumed discount rate. Investors evaluate their projects on the basis of their present value
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