9. You have a long-term goal to take a leave of absence to travel around the world on a three-year adventure.

(LO 4-3)

a. Which formula would you use to calculate how much needs to be saved before you can cover the annual expenditure of $100,000 per year on this adventure?

(1) PMT({1 − [1/(1 + i)n]}/i)

(2) PMT{[(1 − i)n − 1]/i}

(3) PMT{[(1 + i)n − 1]/i}

(4) PMT[(1/1 + i)n/i]

b. Using the reference table method, what factor would you use if you were earning a 3% interest rate annually?

(1) 2.829

(2) 3.091

(3) 0.915

(4) 1.093

c. Using a calculator, which values would you use?

(1) N = 3; I/YR = 3; PMT = 100,000

(2) N = 3; I/YR = 3; PMT = −300,000

(3) N = 3; I/YR = 3; PMT = 300,000

(4) N = 3; I/YR = 3; PMT = −100,000

d. How much savings will you need prior to your leave of absence?

(1) $282,861

(2) $309,090

(3) $274,530

(4) $327,810