James Smith is saving for an Australian vacation in three years.He estimates that he will...

James Smith is saving for an Australian vacation in three years. He estimates that he will need $4,000 to cover his airfare and all other expenses for a week-long holiday in Australia. If he can invest his money in an S&P 500 equity index fund that is expected to earn an average annual return of 9.0 percent over the next three years, how much will he have to save every year if he starts saving at the end of this year?(Round factor values to 4 decimal places, e.g. 1.5212 and final answer to 2 decimal places, e.g. 15.25.)

Savings

Solutions

Expert Solution

The amount is computed as follows:

Future value = Annual savings x [ [ (1 + r)ⁿ – 1 ] / r ]

$ 4,000 = Annual savings x [ [ (1 + 0.09)³ - 1 ] / 0.09 ]

$ 4,000 = Annual savings x 3.2781

Annual savings = $ 1,220.22 Approximately

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Michael Jones is saving for an Australian vacation in three years. He estimates that he will...

Michael Jones is saving for an Australian vacation in three years. He estimates that he will need $5,340 to cover his airfare and all other expenses for a week-long holiday in Australia. If he can invest his money in an S&P 500 equity index fund that is expected to earn an average annual return of 10.6 percent over the next three years, how much will he have to save every year if he starts saving at the end of this...

Thomas Taylor is saving for an Australian vacation in three years.

Thomas Taylor is saving for an Australian vacation in three years. He estimates that he will need $5,850 to cover his airfare and all other expenses for a week-long holiday in Australia. If he can invest his money in an S&P 500 equity index fund that is expected to earn an average annual return of 9.1 percent over the next three years, how much will he have to save every year if he starts saving at the end of this...

A man drew a plan of saving for his vacation in Canada. He saves $200 at...

A man drew a plan of saving for his vacation in Canada. He saves $200 at the end of each month for three years. If the cost of vacation is going to be ($9,384.44), and the interest rate is 11% compounded annually, would the man have enough to cover his vacation at the end of the third year? a). What must his annuity (A) be in order to make it to his vacation if the interest rate is 15% compounded semiannually. b.)...

Danny is saving towards his vacation. He has determined that the total cost including airfare an...

Danny is saving towards his vacation. He has determined that the total cost including airfare an accommodation will amount to $5,000. If he sets aside $400 per month from his salary, starting from the end of this month, in an account that pays interest of 9% per annum, will he have enough to make the trip at the end of the year? How much more will he have in the account if he made his first deposit of $400 today?...

James Street's son, Harold, is 10 years old today. James wants to begin saving money for...

James Street's son, Harold, is 10 years old today. James wants to begin saving money for Harold's college education, which Harold will begin on his eighteenth birthday. James estimates that it will cost $20,000, $22,000, $24,000, and $25,000 for his son's freshmen, sophomore, junior, and senior year respectively. Mr. Street plans to make these amounts available to his son at the beginning of each of these years. Street would like to make eight annual deposits, the first of which would...

James Street's son, Harold, is 10 years old today. James wants to begin saving money for...

10. Jack, Jill and James own a CPA firm (Smith, Smith, Bond and Co., LLC), which...

10. Jack, Jill and James own a CPA firm (Smith, Smith, Bond and Co., LLC), which is taxed as a partnership, and where each work full-time. Each contributed cash of $100,000 to the firm in 2019 at its beginning. The firm in the first year made $40,000 in profit in its first year. Profits and losses are split three ways. The partnership has the following forms of debt: Nonrecourse: $30,000 Recourse: $150,000 (The recourse debt was secured 100% by James)...

Billy rented his vacation home during the year for three monts and he spent one month...

Billy rented his vacation home during the year for three monts and he spent one month there (assume 30 day months). Gross rental income from the property was $6,500. Billy incurred the following expenses: Mortgage interest $3,000; real estate taxes $1,500; utilitities $600; repairs $1,800; depreciation $4,000 Assume you are a tax accountant and calculate for Billy what he needs to report on his tax return. Please show your entire calculation

James Smith is the owner of a once profitable used car business. However, there was a...

James Smith is the owner of a once profitable used car business. However, there was a downturn in the economy and Mr. Smith is in a position where he can hardly pay his debts. He was recently divorced from his wife and in compliance with court order; he is paying her child support for his 2 children. He has numerous creditors seeking payment for services and supplies requested by his company. The total amount owed to his is $200,000. He...

Mr. Smith, an Australian citizen, began working with a company in Oman in November 2015. As...

Mr. Smith, an Australian citizen, began working with a company in Oman in November 2015. As part of his work arrangement, he was required to work a 35 days on and 35 days off rotation. At the end of each rotation, Mr Smith departed from Oman and, on several occasions, returned to Australia to visit family and friends. While he was working in Oman, he lived in a single room apartment with an ensuite, bed, lounge area and a mini...

Subjects