Question

Your anticipated wedding is three years from today. You don't know who your spouse will be but you do know that you are saving $10,000 today and $17,000 one year from today for this purpose. You also plan to pay the final $12,000 of anticipated costs on your wedding day. At a discount rate of 5.5 percent, what is the current cost of your upcoming wedding?

Answer 1

Answer:

$36,333.11

Explanation:

The current cost of the wedding can be found by finding the present value of the discounted cash flows.

Present value is the sum of discounted cash flows.

Present value can be found using a financial calculator

Cash flow in year 0 = $10,000 

Cash flow in year 1 = $17,000

Cash flow in year 2 = 0

Cash flow in year 3 = $12,000

Discount rate = 5.5%

Present value = $36,333.11

I hope my answer helps you