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Future Value

Andy wants Europe to visit relatives when you graduate from college three years from now. cost of the trip is $10,000. Andy has deposited $5,000 for in a CD paying 6% interest annually, maturing three years from now. Aunt Hilda has agreed to finance the balance. If you are going to put Aunt Hilda's gift in an investment earning 10% over the next three years, how much must she deposit now so you can visit your relatives in three years?
a. $3,757
b. $3,039
c. $3,801
d. $3,345

Solution Preview

First step is to calculate the future value of the savings. The amount is $5,000, rate ...

Solution Summary

The solution explains how to determine the amount of savings needed so as to get the required future value