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Homework answers / question archive / Suppose you plan to backpack around Europe after you graduate from the university in 4 years (t=4)
Suppose you plan to backpack around Europe after you graduate from the university in 4 years (t=4). You have estimated it will cost you $15,000 to pursue your dream. How much do you need to invest into a saving account today (t=0) to reach your goal in 4 years? Assume your saving account earns 6% per annum. Round your answer to three decimal places.
| a. |
$13,349.946 |
|
| b. |
$12,358.959 |
|
| c. |
$11,881.405 |
|
| d. |
$13,350.946 |
|
| e. |
$11,208.872 |
PV = FV / (1+r) ^n
= $15,000 / (1+6%) ^4
= $15,000 / 1.06^4
= $11,881.405
The amount you need to invest today = $11,881.405
