On January 1, 2017, you start making plans to take a trip around the world when you graduate in four years. Your grandmother wants to deposit sufficient funds for this trip into a savings account for you. On the basis of a budget, you estimate that the trip currently would cost $15,000. Being the generous and sweet lady she is, your grandmother decided to deposit $3,500 into the fund at the end of each of the next four years, starting on December 31, 2017. The savings account will earn 6 percent annual interest, which will be added to the savings account at each year-end.
Required:
(Show computations and round your answers to the nearest dollar.)
1. How much money will you have for the trip at the end of year four (i.e., after four deposits)?
2. What will be the total amount of interest earned over the four years?
3. How much interest revenue will the fund earn in 2017, 2018, 2019, and 2020?
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