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Suppose an investor wants to have $10 million to retire 45 years from now. How much would she have to invest today with an annual rate of return equal to 15 percent?
  • a)
    $18,561
  • b)
    $17,844
  • c)
    $20,003
  • d)
    $21,345
Correct answer is option 'A'. Can you explain this answer?
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Suppose an investor wants to have $10 million to retire 45 years from ...
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Suppose an investor wants to have $10 million to retire 45 years from ...
Given:
- Amount required for retirement = $10 million
- Time until retirement = 45 years
- Annual rate of return = 15%

To calculate the amount that needs to be invested today, we can use the present value formula:

Present Value = Future Value / (1 + r)^n

where r is the annual rate of return and n is the number of years.

Calculation:

- Future Value = $10 million
- Rate of return = 15%
- Number of years = 45

Using the present value formula:

Present Value = $10 million / (1 + 0.15)^45
= $18,561

Therefore, the investor would need to invest $18,561 today to have $10 million in 45 years at an annual rate of return of 15%.

Answer: Option A) $18,561.
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Suppose an investor wants to have $10 million to retire 45 years from ...
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Suppose an investor wants to have $10 million to retire 45 years from now. How much would she have to invest today with an annual rate of return equal to 15 percent?a)$18,561b)$17,844c)$20,003d)$21,345Correct answer is option 'A'. Can you explain this answer?
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