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    Effective Rate on Investments

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    1) Calculate the future value of $1,000 in 10 years assuming an interest rate of 12% (APR) compounded quarterly. Also calculate the effective rate (EAR) on the investment.

    2) Mr. Wise is retiring in 25 years. He would like to accumulate $1,000,000 for his retirement fund by then. He plans make equal monthly payments to achieve his goal. If the rate of return on the retirement fund is 12%, what will his monthly payments be?

    Show all calculations including intermediate ones for both problems. Show all work.

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    https://brainmass.com/business/finance/effective-rate-investments-285831

    Solution Preview

    1) This is FV of single payment
    FV=A*(1+r/m)^(n*m)
    A=$1000
    r=12%
    m=quarterly=4
    n=10 ...

    Solution Summary

    This solution assists with the question regarding effective rates on investments.

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