The Parks plan to take three cruises, one each year. They will take their first cruise 9 years from today, the second cruise one year after that, and the third cruise 11 years from today. The type of cruise they will take currently costs $5,000, but they expect inflation will increase this cost by 3.5% per year on average. They will contribute to an account to save for these cruises that will earn 8% per year. What equal contributions must they make today and every year until their first cruise (ten contributions) in order to have saved enough at that time for all three cruises? They pay for cruises when taken.
The Parks plan to take three cruises, one each year. They will take their first cruise 9 years from today, the second cruise one year after that, and the third cruise 11 years from today. The type of cruise they will take currently costs $5,000, but they expect inflation will increase this cost by 3.5% per year on average. They will contribute to an account to save for these cruises that will earn 8% per year. What equal contributions must they make today and every year until their first cruise (ten contributions) in order to have saved enough at that time for all three cruises? They pay for cruises when taken.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Parks plan to take three cruises, one each year. They will take their first cruise 9 years from today, the second cruise one year after that, and the third cruise 11 years from today. The type of cruise they will take currently costs $5,000, but they expect inflation will increase this cost by 3.5% per year on average. They will contribute to an account to save for these cruises that will earn 8% per year. What equal contributions must they make today and every year until their first cruise (ten contributions) in order to have saved enough at that time for all three cruises? They pay for cruises when taken.
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