Share
Explore BrainMass

# COMPOUNDED INTEREST

The current cost of a cruise you wish to take in 6 years is \$4,250.00. You expect it will increase by 4% annually.

I can earn 5% on my savings. How much do I need to save at the end of each month so I can afford to take the cruise in six years?

Note: I understand that I need to consider the future amount. Future amount= 4250 x 1.04 ^6= 4250 x 1.27= \$5377.61. Where did the 1.27 come from that is used to multiply the 4250.00 by?

#### Solution Preview

Following is the text part of the solution. Please see the attached file for complete solution. Equations, diagrams, graphs and special characters will not appear correctly here.
===============================

COMPOUNDED INTEREST

The current cost of a cruise you wish to take in 6 years is \$4,250.00. You expect it will increase by 4% annually.
I can earn 5% on my savings. How much do I need to save at the end of each month so I can afford to take the cruise ...

#### Solution Summary

Very detailed step by step solution is provided.

\$2.19