Future value; solving for unknown; single amount
Response to the following :
Refer to the situation described in problem 1. Assume that the trip will cost $26,600. What interest rate, compounded annually, must Bill earn to accumulate enough to pay for the trip?
Problem. 1:
Future value; single amount
Bill O'Brien would like to take his wife, Mary, on a trip three years from now to Europe to celebrate their 40th anniversary. He has just received a $20,000 inheritance from an uncle and intends to invest it for the trip. Bill estimates the trip will cost $23,500 and he believes he can earn 5% interest, compounded annually, on his investment. Will he be able to pay for the trip with the accumulated investment amount?