The solution to this problem requires time value of money calculations. Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. If Garrett has $5,000 per year to invest for 10 years and wants to accumulate $87,745 at the end of that time, he must find an investment that is earning at a rate of
A) 6%
B) 15%
C) 12%
D) 11%

Question

Quizplus · Accepted Answer

Using the future value of an annuity formula or table, the rate that allows $5,000 per year to grow to $87,745 over 10 years is approximately 12%.

The Solution to This Problem Requires Time Value of Money