A young couple would like to establish a travel fund to pay for vacations for their family. They would like to have $10,000 twenty
A young couple would like to establish a travel fund to pay for vacations for their family. They would like to have $10,000 twenty years from now to spend on their first vacation. To counter the effects of inflation, the couple assume that each subsequent vacation will cost 3% more each year. They plan to stop their vacations at the end of thirty years from now. In order to fund their travel, they initially invest $7,000 into an account that pays interest at 6% per year. Three years later, they begin investing $3,000 per year into the account. Compute the number of years to two decimal places that the couple must deposit the $3,000 per year into the travel fund in order to fund their vacations.
Step by Step Solution
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Step: 1
To solve this problem we can use the future value of annuity formula to determine the number of year...See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
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