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The average growth rate needs to be 8.75 percent.

The average growth rate needs to be 8.75 percent.

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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I am trying to save for my daughters education. Right now she is 10 years old and she will be attending school when she is 18. Currently I have $90,000 to invest and I will not be able to contribute anymore through out that time. I estimate that she will need $25000 a year for dormitory costs at an average BC post secondary institution, her costs per semester for school and books will be $10000 and she will have food costs of about $10000 a year. I want to save for a 4 year post secondary program. Using the rule of 70, calculate the average growth rate I would need over that time period to have enough for her to go to school. The average growth rate needs to be 8.75 percent. ***Round your answer to the nearest 2 decimal places***
Transcribed Image Text:I am trying to save for my daughters education. Right now she is 10 years old and she will be attending school when she is 18. Currently I have $90,000 to invest and I will not be able to contribute anymore through out that time. I estimate that she will need $25000 a year for dormitory costs at an average BC post secondary institution, her costs per semester for school and books will be $10000 and she will have food costs of about $10000 a year. I want to save for a 4 year post secondary program. Using the rule of 70, calculate the average growth rate I would need over that time period to have enough for her to go to school. The average growth rate needs to be 8.75 percent. ***Round your answer to the nearest 2 decimal places***
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