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Question 25

Question 25

Essentials Of Investments
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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Question 25, please

**Mutual Funds (Problem 24)** Juan invested $24,000 in a mutual fund 5 years ago. Today, his investment is worth $34,616. Find the effective annual rate of return on his investment over the 5-year period. **College Savings Program (Problem 25)** The Blakes have decided to start a monthly savings program to provide for their son’s college education. How much should they deposit at the end of each month in a savings account earning interest at the rate of 3.5% per year compounded monthly so that, at the end of the tenth year, the accumulated amount will be $40,000? **Retirement Accounts (Problem 26)** Mai Lee has contributed $200 at the end of each month into her company’s employee retirement account for the past 10 years. Her employer has matched her contribution each month. If the account has been earning interest, find the current value of Mai Lee's retirement account.
Transcribed Image Text:**Mutual Funds (Problem 24)** Juan invested $24,000 in a mutual fund 5 years ago. Today, his investment is worth $34,616. Find the effective annual rate of return on his investment over the 5-year period. **College Savings Program (Problem 25)** The Blakes have decided to start a monthly savings program to provide for their son’s college education. How much should they deposit at the end of each month in a savings account earning interest at the rate of 3.5% per year compounded monthly so that, at the end of the tenth year, the accumulated amount will be $40,000? **Retirement Accounts (Problem 26)** Mai Lee has contributed $200 at the end of each month into her company’s employee retirement account for the past 10 years. Her employer has matched her contribution each month. If the account has been earning interest, find the current value of Mai Lee's retirement account.
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A theory that helps to compute the present or future value of the cash flows is term as the TVM (time value of money).

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