Answer: 10.5%.

The correct answer is **C (10.5%)**. Here's why: 1. **Inflation Adjustment**: The client needs $500,000 in today's dollars, but due to 2% annual inflation, this amount grows to $500,000 × (1.02)^15 ≈ $672,934 in 15 years. 2. **Required Return Calculation**: The current savings of $150,000 must grow to $672,934 in 15 years. The required annual return, r, satisfies: 150,000 × (1 + r)^15 = 672,934 Solving for r: r = (672,934 / 150,000)^(1/15) - 1 ≈ 0.105 = 10.5% 3. **Alternative Method**: Calculate the nominal return without inflation (8.4%) and adjust for inflation: (1 + 0.084) × (1 + 0.02) - 1 ≈ 0.105 = 10.5% **Why Not A or B?** - **A (6.2%)**: Incorrectly subtracts inflation from the nominal return. - **B (8.4%)**: Ignores inflation, calculating only the nominal return needed to reach $500,000.

Author: LeetQuiz Editorial Team