You need $40,000 in ten years for the purchase of a new car for your nephew who will be graduating college.  You currently have $20,000 saved and want to invest it for ten years at a 6% rate of return.

1. Will you be able to achieve your investment goal in ten years?

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2. If not, then how much more would you need to invest today, instead of the $20,000, to accumulate that goal in ten years?

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3. If not, and you do not have the extra money to invest now then how much of a return (interest rate) would you need to earn in order to achieve your goal?

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4. If this rate of return involves too much risk, and if you cannot invest more at this time, then how much would you need to invest each year to accumulate your investment goal in ten years?

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5. If you determine that none of the above options are viable then how long would it take to accumulate the full investment goal if you invest $20,000 now at your rate assumption (see below) with no annual additions?

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Answer rating: 100% (QA)

To determine if you will be able to achieve your investment goal of 40000 in ten years with a 6 rate of return we can calculate the future value of yo... View the full answer