Rose plans to go for vacation to europe in 6 years from now. she estimates that she will need $24,388 for the trip. how much does she need to place in a saving account today that earns 5.13% per year (compounded annually) to accumulate this amount? all the work has to be shown! round the answer to two decimal places.
Let $P = the amount that Rose placed into the savings account. The annual compounding rate is r = 5.13% = 0.0513. The duration is n = 6 years. The target amount is A = $24,388.
Use the formula [tex]A=P(1+ \frac{r}{n} )^{nt}
[/tex]
The value of the account after 6 years is [tex]A=P(1+ \frac{0.0513}{12} )^{12\times6}=P(1.00428^{72})=1.3595P[/tex]
