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?
- 門徒Lv 71 十年前最愛解答
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)
= 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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