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Wanda wants to take some time off in five years to backpack through Europe...

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Finance

Wanda wants to take some time off in five years to
backpack through Europe for three months. She esti-
mates her trip expenses for the three months in today's
dollars will be approximately $20,000.(LO4-3)
a. She expects her trip to increase 2% a year due to
increases in the cost of goods and services. Given
this, what should her financial savings goal be to
support the trip?
b. Wanda could make a one-time deposit today in a
savings account that earns 5% interest over the pe-
riod. How much would she have to deposit today
to support the trip?
c. If Wanda is starting with a savings balance of zero
for her trip, how much will she have to put away
each month in her savings account if it offers an
annual interest rate of 4%?
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