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You plan to go on vacation in 3 year. The vacation wil cost you $10,000 at...

You plan to go on vacation in 3 year.
The vacation wil cost you $10,000 at that time.
How much do you have to save today in order to exactly pay for your vacation, if your investment account earns 2.00% APR (compounded annually)?

$9,615
$9,423
$9,524
$9,105
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Answer #1

Desired sum after 3 years = $10,000
Annual interest rate = 2.00%

Present value = Amount required / (1 + Interest rate)^Period
Present value = $10,000 / 1.02^3
Present value = $9,423

So, you need to save $9,423 today to have $10,000 after 3 years

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