Question

You decide to save for your dream vacation to Europe (London, Paris, and Rome). You want to be able to travel in 9 years. If you believe your trip will cost $7,534 and you can earn 9.5 percent annual interest on your savings, how much must you deposit today so you can afford your trip in 9 years?   ROUND ANSWER TO THE NEAREST DOLLAR.

Answer 1

Present Value = Future Value/ (1+r)ⁿ

Present Value = $7534/(1.095)⁹

Present Value = $3,329

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