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Your grandparents have given you an early college gift of $5,000 that you would like to...

Your grandparents have given you an early college gift of $5,000 that you would like to save to fund a post-graduation trip to Europe in 3 years. How much will you have for your trip in 3 years if you can invest this gift at 5% compounded annually? (express your answer as the nearest whole dollar amount?

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Answer #1

This question requires application of basic time value of money, which is:

FV = PV * (1 + r)n

FV = $5000 * (1 + 5%)3

FV = $5000 * 1.1576

FV = $5,788

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