Question: Robert Blanding's employer offers its workers a two-month paid sabbatical every seven years. Robert, who just started working for the firm, plans to spend his sabbatical touring Europe at an estimated cost of $25,000. To finance his trip, Robert plans to make six annual deposits of $2,500 each, starting one year from now, into an investment account earning 8% interest.
Q1. Will Robert's account balance in seven years be enough to pay for his trip?
Q2. Suppose Robert increases his annual contribution to $3,150. How large will his account balance be in seven years?