Michael wanted to ensure that he had $75,000 for his child's university education. As soon as his child was born, he started saving $1,200 every 6 months in an investment fund. If he achieved his investment target on his child's 20th birthday, and he made no deposit on the child's 20th birthday, calculate the following:
Michael wanted to ensure that he had $75,000 for his child's university education. As soon as his child was born, he started saving $1,200 every 6 months in an investment fund. If he achieved his investment target on his child's 20th birthday, and he made no deposit on the child's 20th birthday, calculate the following:
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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I would like to know how to answer this using a Financial Calculator, what are the values? N=, I/Y=, PV=, FV=, PMT=, C/Y=, P/Y=, and BGN/END. I tried the answers %15.85 for a) and 80.13% for b and they were incorrect.
Transcribed Image Text:Michael wanted to ensure that he had $75,000 for his child's university education. As
soon as his child was born, he started saving $1,200 every 6 months in an investment
fund. If he achieved his investment target on his child's 20th birthday, and he made no
deposit on the child's 20th birthday, calculate the following:
a. The nominal interest rate for the investment, compounded quarterly.
15.85 % X
Round to two decimal places.
b. Calculate the effective interest rate for this investment.
80.13 % (x)
Round to two decimal places.
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