Question

You and your sister are planning a large anniversary party 3 years from today for your parents' 50th wedding anniversary. You have estimated that you will need $6,500 for this party. You can earn 2.6 percent compounded annually on your savings. How much would you and your sister have to deposit today in one lump sum to pay for the entire party?

A. $6,076.55
B. $6,018.26
C. $6,308.16
D. $5,934.90
E. $5,868.81

Answer 1

Answer: $6,018.26

Explanation: From the question above, we are calculation the present sum to be invested and it is calculated thus:

A=P(1+r/n)^nt

6,500= P(1+0.026/1)^1*3

6,500=P(1.026)^3

6,500=P(1.080045576)

P=6,500/1.080045576

P=6,018.26

P=$6,018.26

The Initial lump sum savings amount is $6,018.26