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Ruth HWants to Build a House in 12 Years

question 32

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Ruth H.wants to build a house in 12 years.She estimates that the total cost will be $350,000.If she can put aside $20,000 at the end of each year,what rate of return must she earn in order to have the amount needed,assuming annual compounding?

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Definitions:

Cash Investments

Placing money into opportunities expected to yield a financial return, utilizing cash or cash equivalents.

Professional Partnership

A form of business organization where two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Agreement.

Negligence

A failure to take reasonable care or to act with the expected level of diligence, leading to harm or damage.

Limited Partnership

A business structure where one or more partners have limited liability, and at least one partner has unlimited liability.

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