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You want to take a cruise vacation 5 years from now when you complete graduate school. You estimate that you will need $5,000 when you complete graduate school to pay for the cruise. If you can earn 5.9% interest on your deposits, how much would you have to deposit today to be able to pay for the cruise when you graduate? Round your answer to 2 decimals. For example, $100.12.

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Answer #1

Present value = Future value / (1+ rate per period)^ no. of periods

= 5000/1.059^5

= 5000/1.33192509173

= 3753.96

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