Franklin Templeton has just invested $10,460 for his son (age one). This money w
ID: 2742001 • Letter: F
Question
Franklin Templeton has just invested $10,460 for his son (age one). This money will be used for his son’s education 18 years from now. He calculates that he will need $41,840 by the time the boy goes to school.
What rate of return will Mr. Templeton need in order to achieve this goal? Use Appendix B for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
What rate of return will Mr. Templeton need in order to achieve this goal? Use Appendix B for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Explanation / Answer
future value = present value * (1+rate of return)^n
=>
10460 * (1+r)^18 = 41840
rate of return r = 8.01%
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