Account each year in order to be able to afford the trip

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Reference no: EM131851275

A) Marisa wants to travel extensively in Japan when she graduates, 4 years from now. She expects the trip to cost $12,000. Right now she has of $7,000 in a savings account paying a yearly interest rate of 5%. After sitting down and doing some calculations, she realizes that if she does not do anything she won't be able to afford the trip by the time she graduates. In fact, she would miss her objective by roughly...

B) In order to be able to afford the trip, she plans then to finance the balance by making yearly deposits (the first of which 1 year from now) into an investment account earning 9% per year. How much does she need to deposit into this investment account each year in order to be able to afford the trip?

C) Marisa comes up with an alternative plan; she could immediately move her $7,000 from her savings account to the investment account with 9% interest rate. Then she would make, if necessary, monthly deposits to this same account until the time when she graduates. If she follows this plan, how much will she need to deposit each month?

Reference no: EM131851275

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