Franklin Templeton has just invested $9,260 for his son (age one). This money wi
ID: 2778437 • Letter: F
Question
Franklin Templeton has just invested $9,260 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 $71,231 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.)
Franklin Templeton has just invested $9,260 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 $71,231 by the time the boy goes to school.
Explanation / Answer
NO. OF YEAR INT AND PRIN AMOUNT AMOUNT INVESTED TOTAL AMOUNT NO. OF YEAR FOR INT. INT. RATE INT. AMOUNT INT AND PRIN AMOUNT 1 9260 9,260 18 1.29% 2,155.17 11,415.17 2 11415.17 11,415 17 1.29% 2,509.17 13,924.34 3 13924.34 13,924 16 1.29% 2,880.67 16,805.01 4 16805.01 16,805 15 1.29% 3,259.33 20,064.34 5 20064.34 20,064 14 1.29% 3,632.05 23,696.39 6 23696.39 23,696 13 1.29% 3,983.13 27,679.51 7 27679.51 27,680 12 1.29% 4,294.75 31,974.27 8 31974.27 31,974 11 1.29% 4,547.70 36,521.97 9 36521.97 36,522 10 1.29% 4,722.29 41,244.26 10 41244.26 41,244 9 1.29% 4,799.59 46,043.85 11 46043.85 46,044 8 1.29% 4,762.78 50,806.63 12 50806.63 50,807 7 1.29% 4,598.51 55,405.14 13 55405.14 55,405 6 1.29% 4,298.33 59,703.47 14 59703.47 59,703 5 1.29% 3,859.83 63,563.29 15 63563.29 63,563 4 1.29% 3,287.49 66,850.79 16 66850.79 66,851 3 1.29% 2,593.14 69,443.93 17 69443.93 69,444 2 1.29% 1,795.82 71,239.75 18 71239.75 71,240 1 1.29% 921.13 72,160.88
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