Answer:
Aunt Hilda must give him $3,039
Explanation:
Giving the following information:
The trip is expected to cost a total of $10,000. Your parents have deposited $5,000 for you in a CD paying 6% interest annually, maturing three years from now. Aunt Hilda has agreed to finance the balance. If you are going to put Aunt Hilda's gift in an investment earning 10% annually over the next three years.
First, we need to calculate the total amount of the parents investment.
FV= PV*(1+i)^n= 5,000*(1.06)^3= $5,955
Difference= 10,000 - 5,955= 4,045
Aunt investment:
Final value= 4,045
PV= FV/(1+i)^n= 4,045/1.10^3= 3,039
Aunt Hilda must give him $3,039
