Question

To fund your dream around-the-world vacation, you plan to save $1,250 per year for the next 12 years starting one year from now. If you can earn an interest rate of 5.71 percent, how much will you have saved for your vacation? Multiple Choice o $18,431.38 o $20,018.86 o $19,832.35 o О $20,73382 $20,733.82 o $19,582.60

Answer 1

1.
=Amount/rate*((1+rate)^t-1)
=1250/5.71%*(1.0571^12-1)
=20733.81568

2.
=(8487.54/1.056^4-1705/1.056-1912/1.056^2-2965/1.056^4)*1.056^3
=1309.29915

3.
=Future Value*(rate/12)/((1+rate/12)^(12*t)-1)
=2.26*10^6*(4.93%/12)/((1+4.93%/12)^(12*6)-1)
=27038.97743