Jazelle Momba wants to visit her family in Zimbabwe in 2022, which is 6 years fr

Question

Jazelle Momba wants to visit her family in Zimbabwe in 2022, which is 6 years from now. She knows that it will cost approximately $7,700 including flight costs, on-the-ground costs, and extra spending money to stay for 4 months. If she opens an account that compounds interest at 4% semiannually, how much does she need to deposit today to cover the total cost of her visit? (Use Table 12.3.) (Round your answer to the nearest dollar.) Deposit 9901 9852 9091 9612 9423 9238 8417 9151 7938 7513 6830 9610 7921 7350 7473 7130 8375 7462 6663 6302 5645 9327 9010 8877 8746 7107 8535 6274 5019 5439 4241 9053 6139 4224 5268 4751 3505 8874 4970 3186 8787 8240 773 6810 7579 5051 4810 4581 8119 8613 7430 3152 3387 3166 2519 2311 2120 1945 1784 1637 1502 1378 .1264 5339 3936 17 7142 1978 1799 1635 .1486 1351 1228 5134 3714 2703 4155 2502 8277 7536 3769 6598 3589 3418 21 7315 2415 1987 1839 1703 1577 1460 8034 23 7100 4057 3901 3751 5067 2470 971 842 4919 3101 1064 5859 5744 5631 5521 2812 2678 2551 1609 1504 1406 6690 3335 .1956 846 1741 1301 659 4243 1073 2314 1813 1420 4120 0754 0573 35 7059 5939 0937 4529 0318 0221

Explanation / Answer

We can use the Future value of sum formula to know the deposit amount. FV = P * (1+r)^n FV = Future value of deposit = $7700 P = Amount deposited at present = ? r = rate of interest per semi annual period = 4% n = no.of semi annual periods = 6 years * 2 = 12 7700 = P * (1+0.04)^12 7700 = P*1.601032 P = 4809.40 Deposit = $4809

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