A frustrated wife has a husband who makes a trip to Las Vegas once a year...

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A frustrated wife has a husband who makes a trip to Las Vegas once a year...

A frustrated wife has a husband who makes a trip to Las Vegas once a year with his college buddies. The average cost of each trip is $2,100.00. If this trip will be completed every year for the next 20.00 years, what is the cost in today’s dollars to the couple? Assume a discount rate of 4.00%.

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Answer 1

Answer #1

Present value = P{[1 - (1 + r)^-n] / r}

Present value = $2,100.00{[1 - (1 + 0.04)^-20] / 0.04}

Present value = $28,539.69

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Answer 2

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