Question: Five years ago Peter had started his saving for his children's higher education by putting a lump sum of $25,000 into an investment instrument on

  • Five years ago Peter had started his saving for his children's higher education by putting a lump sum of $25,000 into an investment instrument on the securities market. The investment has been paying a rate of returns of 12.3% per year, compounding monthly.  
  • Required:
  • a. Calculate how much money has Peter accumulated from his investment now?
  •  b. If Peter's initial investment was $30,000 and he had obtained the same investment outcome after five years, how much should have been the actual rate of return, assuming compounding annually for his investment ?
  • c. If Peter would like to have totally $60,000 for his children's higher education and moves all the saving accumulated from current investment after five year to another instrument that pays the interest rate of 13.5% per year, compounding annually. How long will it take for Peter to reach his target of $60,000 ? 

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