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My (fictional) rich uncle

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THE SCENARIO There's been a lot of talk recently in the news about the estate tax repeal, so today I'll be doing a problem related to it. Please note that I don't have a rich uncle who passed away this year. This is just something of a thought experiment. Currently, the estate tax only applies to estates above $5.49 million for single people and around $11 million for married couples. That is, the first $5,490,000 of the estate is exempt from the tax. Let's say that my uncle had the median American wealth in January of 1989, $85,060. And let's say that he sadly passed away this January (2017), and his estate was worth enough to pay the estate tax on $10,000 of his wealth. The question: What was my uncle's average annual ROI on his wealth if he invested all of it every year between 1989 and 2017? For simplicity, use monthly compounding, assume that he never had to pay any taxes on his investments during his lifetime, and assume that my uncle was a bachelor.
THE SOLUTION The two 'first things' we need to calculate are how many months are involved in the scenario and how much his total wealth was at the end. The number of months is the number of years (2017 - 1989 = 28) times 12. That works out to 28 x 12 = 336. Since the first $5,490,000 of my uncle's estate is exempt from the estate tax, and $10,000 is taxable, that means that his total estate is worth $5,500,000 at the time of his death. First things first, make sure the calculator is using 12 Payments per Year. N: 336 I/YR: (this is what I'm trying to find) PV: -85,060 (My uncle's invested wealth in 1989 was $85,060) PMT: 0 FV: 5,500,000

My uncle would have had to get an average return of 14.98% for each of the years between 1989 and 2017 to grow his estate's value to the point where $10,000 of it was subject to the estate tax.

What do you think? Do you think you could make 15% on your money year in and year out for nearly 3 decades? If you did, what would you think of your heirs getting less than everything you'd managed to accumulate during your lifetime? Let us know in the comments!