Misty needs to have $15,000 at the end of 5 years to fulfill her goal of
purchasing a small sailboat
Incomplete.
To calculate how much Misty needs to save per year in order to accumulate $15,000 at the end of 5 years, we can use the concept of compound interest.
Compound interest is calculated using the formula:
A = P * (1 + r/n)^(n*t)
Where:
A = future value of the investment
P = initial principal (the amount Misty needs to save per year)
r = interest rate per period
n = number of compounding periods per year
t = number of years
In this case, Misty wants to accumulate $15,000 in 5 years, so we need to rearrange the formula to solve for P (the amount she needs to save per year):
P = A / [(1 + r/n)^(n*t)]
Let's assume a conservative interest rate of 5%, compounded annually. The formula becomes:
P = $15,000 / [(1 + 0.05/1)^(1*5)]
P = $15,000 / (1.05^5)
P = $15,000 / 1.27628
P ≈ $11,742.27
Therefore, Misty needs to save approximately $11,742.27 per year for 5 years in order to accumulate $15,000 and fulfill her goal of purchasing a small sailboat.