Juan invested $25,000 in a mutual fund 6 yr ago. Today his investment is worth $
ID: 2670868 • Letter: J
Question
Juan invested $25,000 in a mutual fund 6 yr ago. Today his investment is worth $45,019. Find the effective annual rate of return on his investment over the 6-yr period. (Round your answer to two decimal places.) ______________The Blakes have decided to start a monthly savings program in order 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 5%/year compounded monthly so that, at the end of the tenth year, the accumulated amount will be $49,000? (Round your answer to the nearest cent.)
$ ___________________
Explanation / Answer
Juan invested $25,000 in a mutual fund 6 yr ago. Today his investment is worth $45,019. Find the effective annual rate of return on his investment over the 6-yr period. (Round your answer to two decimal places.) PV = 25,000 N = 6 PMT = 0 FV = -45,019 Therefore I/Y = 10.30 ANS: EAR = 10.30% The Blakes have decided to start a monthly savings program in order 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 5%/year compounded monthly so that, at the end of the tenth year, the accumulated amount will be $49,000? (Round your answer to the nearest cent.) PV = 0 N = 10*12 = 120 I/Y = 5/12 FV = -49,000 therefore PMT = 315.55 ANS: $315.55
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