Finance

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You currently have $7,500 to invest. You can invest the full amount now for a periodof 9 years at which time you want to have $15,000. Approximately what rate ofreturn is needed to accomplish this investment goal?

  • Finance -

    Pt = Po + Po*rt,
    Pt = Po(1+rt),
    7500(1+9r) = 15,000.
    Divide both sides by 7500:
    1 + 9r = 2,
    9r = 2 - 1 = 1.
    r = 1 / 9 = 0.111 = 11.111%.

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