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25 December, 04:03

Your parents will retire in 26 years. They currently have $220,000 saved, and they think they will need $1,950,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.

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  1. 25 December, 07:57
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    Annual rate of interest is 9%

    Explanation:

    The annual rate of interest is computed using the excel formula of Rate as:

    =Rate (nper, pmt, pv, fv, type)

    where

    nper is number of years which is 26 years

    Pmt is monthly payment which is 0

    pv is present value which is - $220,000

    fv is future value which is $1,950,000

    type is 0

    So, putting the values above:

    =Rate (26,0,-220000,1950000,0)

    =9%

    Therefore, the rate of interest is 9%
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