At what interest rate will you need to invest in the current IRA account balance in order to achieve your goal? Set the following question up in excel to show the final answer.
You will be graduating in two years and are thinking about your future. You know that you will want to buy a house five years after you graduate and that you will want to put down a $60,000 down payment at that time. As of right now, you have $8,000 in your IRA account. You are fairly certain that once you graduate, you can work in the family business and earn $32,000 a year, with a 5 percent raise every year.
You plan to live with your parents for the first two years after graduation, which will enable you to minimize your expenses and put away $10,000 each year from your salary. For the next three years, you will have to live on your own as your younger sister will be graduating from college and has already announced her plan to move back into the family house. Thus, you will be able to save only 13 percent of your annual salary. Assume that you will be able to invest savings from your salary at 7.2 percent.
At what interest rate will you need to invest in the current IRA account balance in order to achieve your goal?
Set the following question up in excel to show the final answer.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
