Mr Jones expects that his son will be married in Hawaii in 3 years

Finance Nov 13, 2020

Mr Jones expects that his son will be married in Hawaii in 3 years. Including airfare, hotel accommodations, rehearsal dinner and wedding attire, the estimated cost is $28,000. How much must Mr. Jones deposit now into a Certificate of Deposit paying 4% annually to pay for the celebration?

Expert Solution

Present value=28000*Present value of discounting factor(rate%,time period)

=28000/1.04^3

=28000*0.888996359

=$24891.9(Approx)

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