Question

you want to be able to travel and withdraw $3750 at the end of every month during your year long trip. during your trip your travel fund will earn 6.24% compounded monthly. what is the size of your travel fund if you want to be able to start your trip in 4 years and 7 months?

Answer 1

The size of your travel fund, if you want to be able to start your trip in 4 years and 7 months, is $230,972.96.

Step-by-step explanation:

To determine the size of your travel fund, we can use the formula for future value of an annuity:

FV = P * ((1 + r)^n - 1) / r

Where:

• FV is the future value or size of the travel fund
• P is the monthly withdrawal amount ($3750)
• r is the monthly interest rate (6.24% / 12 = 0.052)
• n is the number of months between the start of the trip and the present time (4 years and 7 months = 55 months)

Plugging in the values into the formula:

FV = 3750 * ((1 + 0.052)^55 - 1) / 0.052 = $230,972.96