You plan to go to Asia to visit friends in three years. The trip is ex

You plan to go to Asia to visit friends in three years. The trip is expected to cost a total of $10,000 at
that time. Your parents have deposited $5,000 for you in a Certificate of Deposit paying 6% interest
annually, maturing three years from now.

Uncle Lee has agreed to pay for all remaining expenses.
If you are going to put Uncle Lee’s gift in an investment earning 10% over the next three years, how
much must he deposit today, so you can visit your friends three years from today?
A) $5,801 B) $3,757 C) $3,039 D) $3,345

ANSWER

C