E26-21 Using the time value of money.

Sharon wants to take the next five years off work to travel around the world. She estimates her annual cash needs at $34,000 (if she needs more, she will work odd jobs). Sharon believes she can invest her savings at 8% until she depletes her funds.

Requirements:

1. How much money does Sharon need now to fund her travels?

2. After speaking with a number of banks, Sharon learns she will only be able to invest her funds at 6%. How much does she need now to fund her travels?