Adrianna want to set aside some money for a vacation in 3 years. How much does Adrianna need to set aside today in order to have $8600 in 3 years if it is invested at 5% compounded annually. I am so confused!! Thanks for all your help!!

Answer 1

1.05^3 = 1.157625

1.157625 * x = 8600

x = 7429.00

Answer 2

P = Po*(1+r)^n = $8600

r = 5%/100% = 0.05

n = 1comp./yr. * 3yrs. = 3 Compounding
periods.

Po*(1.05)^3 = 8600
Po = 8600/1.05^3 = $7429.00 To be set
aside today.