3 4 9 6 7 8 9 10 11 12 13 14 15 16 17 18 19 0.816 0.794 0.763 0.735 0.713 0.681 0.630 0.583 0.582 0.540 0.544 0.500 0.508 0.063 0.475 0.429 0.444 0.397 0.415 0.368 0.340 0.315 0339 0.292 0.317 0.270 0250 0232 999 0 0.388 0.362 0.296 0.277 0.772 0.700 0.650 0.596 0.547 0.502 0.460 0.422 0.306 0300 0.350 0.319 0.356 0326 0.299 0275 0.751 0.731 0.683 0.659 0.621 0.593 0.564 0.535 0513 0.467 0252 0.231 0212 0.194 0.290 0263 0239 0218 0.190 0.180 0.164 0.712 0.636 0.567 0.507 0209 0.100 0.170 0.153 0.138 LAN 0.452 0.404 0.361 0.434 0.391 0.352 0322 0317 0287 0.286 0.257 0258 0229 0232 0206 0.183 0.163 0.106 0.130 0.116 0.693 0675 0613 0.592 0519 0.456 0.425 0.400 0.376 0.351 0333 0.308 0.295 0261 0231 0204 0.181 0.160 0.543 0.400 0.141 0.125 0.111 0.098 0270 0237 0208 0.182 0.160 0.140 0.123 0.108 0.095 0.083 0.668 0572 0.497 0.432 0.376 0.327 0284 0247 0215 0.187 0.163 0.141 0.123 0.107 0.093 0.081 0.070 0.641 0.552 0.476 0.410 0.354 0.305 0.263 0227 0.195 0.168 0.145 0.125 0.105 0.093 0.000 0.069 0.060

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
Problem 1PS
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Related questions
Question

Kirk Van​ Houten, who has been married for 20 ​years, would like to buy his wife an expensive diamond ring with a platinum setting on their 30​-year wedding anniversary. Assume that the cost of the ring will be ​$19,851 in 10 years. Kirk currently has ​$4,500 to invest. What annual rate of return must Kirk earn on his investment to accumulate enough money to pay for the​ ring? 

The annual rate of return Kirk must earn on his investment is ______​%. ​(Round to the nearest​ integer.)

PVIF table is attached

Data table
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
30
40
50
0.936
0.873
0.816
0.763
0.713
0.666
0.623
0.582
0.544
0.508
0.475
0.444
0.415
0.926
0.857
0.339
0.317
0.296
0.277
0.258
0.242
0.226
0.794
0.735
0.681
0.630
0.583
0.540
0.500
0.547
0.602
0.450
0.063
0.422
0.429
0.358
0.397 0.356
0.368
0.326
0.388 0.340
0.299
0.362
0.315
0275
0.252
0.231
0212
0.194
0.178
0.199 0.164
0.184
0.150
0.170
0.138
0.158
0.126
0.146
0.116
0.099
0.076
0.046
0.032
0.013
0.292
0.270
0.250
0.232
0.215
9%
0.211
0.197
0.184
0.131
0.067
0.034 0.021
0.917
0.842
0.772
0.700
0.650
0.596
Present Value of $1 (PVIF)
11%
12%
10%
0.909
0.901
0.826
0.812
0.751 0.731
0.683
0.659
0.636
0.621
0.593 0.567
0.564
0.535
0.507
0.452
0.404
0.361
0.322
0287
0513
0.467
0.424
0.386
0.350
0.319
0.290
0.263
0.239
0218
0.198
0.180
0.164
0.149
0.136
0.123
0.112
0.102
0.092
0.057
0.022
0.009
0.434
0.391
0.352
0.317
0.286 0.257
0.250
0229
0.232
0.206
0209
0.183
0.100
0.170
0.153
0.138
0.124
0.112
0.101
0.091
0.082
0.893
0.797
0.712
0.074
0.044
0.015
0.005
0.163
0.146
0.130
0.116
0.104
0.093
0.083
0.074
0.066
0.059
0.033
0.011
0.003
13%
0.885
0.783
0.693
0.613
0.643
0.480
0.425
0.376
0.333
0.295
0.261
0.231
0.204
0.181
0.160
0.141
0.125
0.111
0.098
0.087
0.077
0.068
0.060
0.053
14%
0.047
0.026
0.877
0.769
0.308
0270
0237
0208
0.182
0.160
0.140
0.123
0.108
0.095
0.083
0.073
0.064
0.056
0.049
0.043
0.030
0.020
0.008
0.005
0.002 0.001
15%
0.870
0.756
0.668
0.675
0.592
0.519
0.456
0.400
0.376
0.351 0.327
0284
0247
0215
0.187
0.163
0.141
0.572
0.497
0.432
0.123
0.107
0.093
0.081
0.070
0.061
0.053
0.045
0.040
0.035
0.030
0.015
0.004
0.001
16%
0.862
0.743
0.641
0.552
0.476
0.410
0.354
0.305
0.263
0.227
0.195
0.168
0.145
0.125
0.108
0.093
0.000
0.069
0.060
0.051
0.044
0.038
0.033
0.028
0.024
0.012
0.003
0.001
Transcribed Image Text:Data table 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 30 40 50 0.936 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.544 0.508 0.475 0.444 0.415 0.926 0.857 0.339 0.317 0.296 0.277 0.258 0.242 0.226 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.547 0.602 0.450 0.063 0.422 0.429 0.358 0.397 0.356 0.368 0.326 0.388 0.340 0.299 0.362 0.315 0275 0.252 0.231 0212 0.194 0.178 0.199 0.164 0.184 0.150 0.170 0.138 0.158 0.126 0.146 0.116 0.099 0.076 0.046 0.032 0.013 0.292 0.270 0.250 0.232 0.215 9% 0.211 0.197 0.184 0.131 0.067 0.034 0.021 0.917 0.842 0.772 0.700 0.650 0.596 Present Value of $1 (PVIF) 11% 12% 10% 0.909 0.901 0.826 0.812 0.751 0.731 0.683 0.659 0.636 0.621 0.593 0.567 0.564 0.535 0.507 0.452 0.404 0.361 0.322 0287 0513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0218 0.198 0.180 0.164 0.149 0.136 0.123 0.112 0.102 0.092 0.057 0.022 0.009 0.434 0.391 0.352 0.317 0.286 0.257 0.250 0229 0.232 0.206 0209 0.183 0.100 0.170 0.153 0.138 0.124 0.112 0.101 0.091 0.082 0.893 0.797 0.712 0.074 0.044 0.015 0.005 0.163 0.146 0.130 0.116 0.104 0.093 0.083 0.074 0.066 0.059 0.033 0.011 0.003 13% 0.885 0.783 0.693 0.613 0.643 0.480 0.425 0.376 0.333 0.295 0.261 0.231 0.204 0.181 0.160 0.141 0.125 0.111 0.098 0.087 0.077 0.068 0.060 0.053 14% 0.047 0.026 0.877 0.769 0.308 0270 0237 0208 0.182 0.160 0.140 0.123 0.108 0.095 0.083 0.073 0.064 0.056 0.049 0.043 0.030 0.020 0.008 0.005 0.002 0.001 15% 0.870 0.756 0.668 0.675 0.592 0.519 0.456 0.400 0.376 0.351 0.327 0284 0247 0215 0.187 0.163 0.141 0.572 0.497 0.432 0.123 0.107 0.093 0.081 0.070 0.061 0.053 0.045 0.040 0.035 0.030 0.015 0.004 0.001 16% 0.862 0.743 0.641 0.552 0.476 0.410 0.354 0.305 0.263 0.227 0.195 0.168 0.145 0.125 0.108 0.093 0.000 0.069 0.060 0.051 0.044 0.038 0.033 0.028 0.024 0.012 0.003 0.001
Expert Solution
Approach

Here firstly we will assume that $19851 is the future value in 10years and $4500 is the present value for the investment

To calculate the required rate of return we will first equate the two equations

formula:-

FV= PV(1+R)^n

where fv= future value

pv = present value

r= annual rate of return

 

steps

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