Sara & Jerry have been working extremely hard at their 9 to 5 jobs and they want to go on a vacation to get some well deserved rest & relaxation. They have decided that they are going to a secluded beach resort to fulfill this goal and the vacation that they want will cost them $5,000 total. Assuming that they have $1,000
in their "Iwannagetaway" fund already and that they can contribute $250/month to this fund and that they can make this money work at 9% interest, how long will it take them to reach their goal of $5,000?
Answer (Enter these numbers in your 10bii financial calculator)
N (the number of months) = ??? (this is what we are solving)
I/YR (interest rate/year) = 9 (this is the interest that they are able to earn on their money per year)
PV (present value) = -$1,000 (this is the money that they have today that they are going to invest)
PMT (monthly payments) = -$250 (this is how much they are contributing every month.
FV (future value) = $5,000 (this the the final goal amount that Sara & Jerry want to have to go on vacation)
After entering in this information, the N = 14.75. This means that if Sara & Jerry invest $1,000 today and $250/month at 9% interest, then they will have $5,000 in 14.75 months.