Assume the total cost of a college education will be $200,000 when your child enters college in 16 years. You presently have $67,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college education? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Annual rate of interest %
Assume the total cost of a college education will be $200,000 when your child enters college in 16 years. You presently have $67,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college education? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Annual rate of interest %
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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Graw
Hill
Assume the total cost of a college education will be $200,000 when your child enters
college in 16 years. You presently have $67,000 to invest. What annual rate of interest
must you earn on your investment to cover the cost of your child's college education?
(Do not round intermediate calculations and enter your answer as a percent rounded
to 2 decimal places, e.g., 32.16.)
Annual rate of interest
2
#
3
54
$
4
%
%
5
< Prev
A
6
7 of 10
&
7
Next>
*
8
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Transcribed Image Text:1
ok
rences
Mc
Graw
Hill
Assume the total cost of a college education will be $200,000 when your child enters
college in 16 years. You presently have $67,000 to invest. What annual rate of interest
must you earn on your investment to cover the cost of your child's college education?
(Do not round intermediate calculations and enter your answer as a percent rounded
to 2 decimal places, e.g., 32.16.)
Annual rate of interest
2
#
3
54
$
4
%
%
5
< Prev
A
6
7 of 10
&
7
Next>
*
8
[+]
Expert Solution
Step 1
The annual rate of interest is the percentage of the amount of money you invest or borrow that is paid or received as interest over the course of a year. It represents the cost of borrowing or the return on an investment and is expressed as a percentage. In this context, the annual rate of interest refers to the rate of return that will be needed to earn on the investment in order to accumulate enough money to cover the cost.
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