Question

You are planning a special wedding three years from today. You don't know who your spouse will be but you do know that you are saving $25,000 today and $35,000 one year from today for this purpose. You also plan to pay the final $45,000 of costs on your wedding day. At a discount rate of 7 percent, what is the current cost of your special wedding

Answer 1

Total amount collected = $94,400

Step-by-step explanation:

Given:

1st investment = $25,000

2nd Investment = $35,000

3rd investment = $45,000

Computation of total amount:

`Total\ amount = (25,000)/(1) +(35,000)/((1+r)^1) +(45,000)/((1+r)^3) \\\\Total\ amount = (25,000)/(1) +(35,000)/((1+0.07)^1) +(45,000)/((1+0.07)^3) \\\\Total\ amount = (25,000)/(1) +(35,000)/((1.07)^1) +(45,000)/((1.07)^3) \\\\Total\ amount = (25,000)/(1) +(35,000)/((1.07)) +(45,000)/((1.2250)) \\\\Total\ amount = 25,000 +32,710.28 +36,734.6939 \\\\Total\ amount = 94,444 \\\\`

Total amount collected = $94,400