Your Son Is Born Today and You Want to Make

question 47

Multiple Choice

Your son is born today and you want to make him a millionaire by the time he is 50 years old.You deposit $10,700 in an investment account and want to know what annual interest rate must you earn in order to have the account value equal to $1,000,000 on your son's 50th birthday.

• A) 17.8%
• B) 12.4%
• C) 9.5%
• D) 6.2%

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Definitions:

Scientific Method

A systematic approach to research where a problem is identified, relevant data is gathered, a hypothesis is formulated from these data, and the hypothesis is empirically tested.

Economic

Pertains to the production, distribution, and consumption of goods and services, and the analysis of behaviors and decisions related to these processes.

Fallacy of Composition

The erroneous belief that what is true for a part is necessarily true for the whole, particularly in economics.

Model

A simplified representation of reality, often mathematical, used to analyze and predict complex systems or phenomena.