Financial Management

Please help to find the interest rate for below Q

A financial planning service offers a college savings program. The plan calls for you to make 6 annual payments of $8000 each, with the 1st payment occurring today, your child's 12th b-day. Beginning on your child's 18th b-day, the plan will provide $20000 per year for 4 yrs, what return is this investment offering?

1 個解答

  • 門徒
    Lv 7
    1 十年前

    Cost of Investment is HK$48,000 (HK$8,000 x 6)

    Total return is HK$80,000 (HK$20,000 x 4).

    Net return is HK$32,000 (HK$80,000-HK$48,000)

    Rate =HK$32,000/4/HK$48,000)

    = 16.67% p.a.

    This is a simple calculation. I have ignored any inflation rate created from time

    difference. Tell me if it's not the answer.

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