Michaela would like to have $10,000 for a European vacation in four years. Currently, she has saved $8,000. If she puts $8,000 in an account that earns 6% interest, compounded annually, will she be able to take the vacation in four years?
What will be an ideal response?
Yes.
FV = $8,000 × 1.26248 (Table 1; n = 4; i = 6%) = $10,100, which is more than the $10,000 desired amount.
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