Your dream vacation will cost $7,069. Using this amount answer the questions below.

1) Assuming that your estimated total cost will grow by 2.5% per year (due to inflation), demonstrate how you would compute the expected future cost of your dream vacation.

2) Suppose that you can invest money every month into a fee-free mutual fund and that this fund is expected to have a 10% nominal annual rate of return. Using your estimated future cost (including inflation) as future value, determine the amount of money you must save each month for the next 10 years (i.e., 120 months) to achieve your goal. Then, determine the monthly amount you must save if you delay your trip for an additional 5 years (that is, you will take the trip 15 years from today = 180 months) instead of 10 years from today.