To retire at a decent age and move to Hawaii, an engineer plans to trust her account to an investment firm that promises to make a real rate of return of 10% per year when the inflation rate is 4% per year. If the account currently is valued at $422,000 and she wants to retire in 15 years, how much (in then-current dollars) will have to be in the account for the realized rate of return to be a real 10% per year? Also, write a single- cell spreadsheet function to display the answer.
To retire at a decent age and move to Hawaii, an engineer plans to trust her account to an investment firm that promises to make a real rate of return of 10% per year when the inflation rate is 4% per year. If the account currently is valued at $422,000 and she wants to retire in 15 years, how much (in then-current dollars) will have to be in the account for the realized rate of return to be a real 10% per year? Also, write a single- cell spreadsheet function to display the answer.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 35P
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To retire at a decent age and move to Hawaii, an engineer
plans to trust her account to an investment firm
that promises to make a real
year when the inflation rate is 4% per year. If the account
currently is valued at $422,000 and she wants
to retire in 15 years, how much (in then-current dollars)
will have to be in the account for the realized rate
of return to be a real 10% per year? Also, write a single-
cell spreadsheet function to display the answer.
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